Innovation and internationalization through exports

Abstract

Successful product innovation leads to the decision by small and medium enterprises (SMEs) to enter the export market. We argue that in addition to a direct effect of innovation on exports, product innovation, through its effect on firm productivity, increases the likelihood of the firm entering the export market. Using a panel of Spanish manufacturing firms, we show that the strong positive association found between firm productivity and exports in the literature relates to the firm's earlier innovation decisions, and that, when controlling for product innovation, the relationship between productivity and exports vanishes for these innovating firms.

Rapid expansion of international new ventures across institutional distance

“…The third candidate is a firm's manufacturing productivity, which reflects the overall manufacturing efficiency in transforming all inputs (e.g., labor, machine, and intermediate materials) into final products (Chang & Wu, 2014). Productivity can be explained by the previous experience of the executives, especially by their international experience (Cassiman & Golovko, 2011;Le & Kroll, 2017). Productivity plays a decisive role in determining the export propensity (Melitz, 2003).…”

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

“…This method has been applied in several other studies in international business research (e.g., Cassiman & Golovko, 2011;Chang, Chung, & Moon, 2013) and has been recommended in a prominent IB Journal (Reeb et al, 2012). In essence, the method attempts to create a situation that comes as close to randomized experiments as possible in three steps.…”

Innovation and Internationalization of Young Entrepreneurial Firms

“…In their extensive survey of the literature on early internationalizing firms, Rialp et al (2005) do not even mention the term innovation. This gap is particularly surprising because (i) early works in the field of international entrepreneurship emphasize the role of innovation and technology as important drivers of early internationalization (Oviatt and McDougall, 1994;Knight and Cavusgil, 1996) and (ii) numerous studies on incumbent firms -and on small and medium-sized enterprises (SMEs) in particular -indicate that there is a positive relationship between innovation and internationalization at the firm level (Cassiman and Golovko, 2011;Ganotakis and Love, 2011; among others). Moreover, existing empirical studies on the relationship between innovation and the internationalization of new ventures are typically small-scale qualitative studies with findings that are not entirely conclusive (Ramos et al, 2011).…”

“…Recently, Cassiman and Golovko (2011) cleverly connected these two strands by noting that innovation, particularly product innovation, may have both direct and indirect effects on internationalization. First, innovation increases the likelihood of SME internationalization because of increased foreign demand for new products, which is consistent with several previous studies that have related innovation and internationalization directly (see Appendix 1).…”

“…Second, this paper is based on a large cross-country dataset, which increases the generalizability of the findings and allows possible country differences in the innovation-internationalization nexus to be identified in a single dataset. To our knowledge, previous studies have focused on one country, primarily Spain (Caldera, 2010;Cassiman and Golovko, 2011;Monreal-Perez et al, 2012), Italy (Basile, 2001;Nassimbeni, 2001) or the United Kingdom (UK) (Wakelin, 1998;Ganotakis and Love, 2011); only two studies have focused on an emerging country, China (Guan and Ma, 2003) and Turkey (Ozcelik and Taymaz, 2004). Expanding the research to other developed and emerging countries is important because international entrepreneurship research has devoted little attention to new ventures in emerging economies compared to developed economies (Yamakawa et al, 2008).…”