The Effects of Internationalization on Innovation: Firm-Level Evidence for Transition Economies

Martijn Boermans and Hein Roelfsema ()

No 12-04, Working Papers from Utrecht School of Economics

Abstract: It is well-documented that international enterprises are more productive. Only few studies have explored the effect of internationalization on productivity and innovation at the firm-level. Using propensity score matching we analyze the causal effects of internationalization on innovation in 10 transition economies. We distinguish between three types of internationalization: exporting, FDI, and international outsourcing. We find that internationalization causes higher levels of innovation. More specifically, we show that (i) exporting results in more R&D, higher sales from product innovation, and an increase in the number of international patents (ii) outward FDI increases R&D and international patents (iii) international outsourcing leads to higher sales from product innovation. The paper provides empirical support to the theoretical literature on heterogeneous firms in international trade that argues that middle income countries gain from trade liberalization through increases in firm productivity and innovative capabilities.

Keywords: Firm heterogeneity; Internationalization; Innovation; Transition economies (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-ino, nep-int, nep-ipr, nep-pr~, nep-tid and nep-tra
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Citations: View citations in EconPapers (9)

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Journal Article: The Effects of Internationalization on Innovation: Firm-Level Evidence for Transition Economies (2015)
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