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Product innovation by supplying in domestic and foreign markets

Massimiliano Bratti and Giulia Felice ()

No 2018-03, Working Papers from Joint Research Centre, European Commission (Ispra site)

Abstract: This paper uses European firm-level survey data to provide some robust empirical evidence that suppliers engaged in production to order (PTO) for foreign firms are more likely to introduce product innovations than those engaged in PTO for domestic firms, even when differences in size, R&D and productivity are controlled for. We propose a demand-driven theoretical explanation based on the interactions between an upstream producer of a specialized input and a downstream producer in a framework of incomplete contracts, agency frictions, and imperfect information.

Keywords: buyer; supplier; product innovation; production to order; foreign market (search for similar items in EconPapers)
JEL-codes: D21 D22 F21 L23 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind, nep-ino, nep-int, nep-sbm and nep-tid
Date: 2018-06
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Published by Publications office of the European Union, 2018

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Persistent link: https://EconPapers.repec.org/RePEc:jrs:wpaper:201803

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