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Export-led innovation: the role of export destinations

Author

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  • Fassio, Claudio

    (CIRCLE, Lund University)

Abstract
This paper investigates the effect of exporting activities on the innovation strategies of firms in France, Germany, Italy, Spain and UK. It puts forward the hypothesis that the positive effect usually found in the related literature is driven by two main mechanisms. The first is a technological learning effect that allows firms active in international markets to benefit from foreign knowledge spillovers in technologically advanced markets and decrease their research cost for the development of innovations. The second is a foreign demand effect according to which the increase of demand induced by the access to foreign markets increases also the profitability of introducing innovations. The paper uses firm-level information about the export destinations of exporters and creates two indices to proxy the two effects, using respectively foreign R&D intensity and foreign growth of imports of the countries of destination of exports, measured at the sectoral level. The empirical analysis, which takes into account possible endogeneity issues related with the firms’ strategic choice of the markets of destination, shows that the two effects induce the adoption of different innovation strategies: while the technological learning effect increases mainly the incentives to introduce brand new product innovations, the foreign demand effect fosters the adoption of efficiency strategies.

Suggested Citation

  • Fassio, Claudio, 2015. "Export-led innovation: the role of export destinations," Papers in Innovation Studies 2015/17, Lund University, CIRCLE - Centre for Innovation Research.
    • Handle: RePEc:hhs:lucirc:2015_017
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    More about this item

    Keywords

    Export activity; Innovation strategies; Destination of exports; International Spillovers; International demand;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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