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The Effects of the Internationalisation of Firms on Innovation and Productivity

Iulia Siedschlag (), Xiaoheng Zhang and Brian Cahill

No WP363, Papers from Economic and Social Research Institute (ESRI)

Abstract: This paper examines the effects of the internationalisation of firms via foreign direct investment and trade on their innovation and productivity performance. Our econometric results suggest that foreign affiliates and domestic exporters were more likely to invest in innovation and furthermore that they were more likely to be more successful in terms of innovation output and higher productivity than firms that served only the domestic market. On average, innovation output was positively associated with labour productivity over and above other determinants. Access to external knowledge flows explain to a large extent the innovation performance of firms, in particular co-operation with suppliers, with consultants, commercial labs or private R&D institutes, with universities or other higher education institutions.

Keywords: Productivity/Foreign; direct; investment/investment/exporters/education (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ino, nep-int and nep-sbm
Date: 2010-12
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