Product and Process Innovation as a Response to Increasing Imports and Foreign Direct Investment

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.The paper analyses the hypotheses that imports and inward foreign direct investment (FDI) have positive effects on the innovative activity of domestic firms because competition on the domestic market is thereby increased, and domestic firms have to perform more efficiently to maintain their market position. Chamberlain's random effects probit approach which may account for individual heterogeneity depending on exogenous variables is used to analyse a panel data set containing 1270 firms of the German manufacturing industry from 1984 to 1988. It turns out that both import share and FDI-share have positive and significant effects on product and process innovations.

Exploring Firm-Level Innovation and Productivity in Developing Countries: The Perspective of Caribbean Small States

“…Several studies of firms in the manufacturing and service sectors in various countries have found that FDI and foreign ownership positively affected innovative activity and productivity. Firms operating locally with foreign investors have more researchers and learn more from more sources such as suppliers and customers, universities and their intra-firm global information (Love, Ashcroft, and Dunlop, 1996;Erdilek, 2005;Wagner, 2006;Blind and Jungmittag, 2004;Bertschek, 1995;Lofts and Loundes, 2000;Masso, Roolaht, and Varblane, 2010;Griffith, Redding, and van Reenen, 2004;Criscuolo, Haskel, and Slaughter, 2005). Other studies have shown that FDI may have no effect on innovation (Lööf, Ebersberger, and Jahansson, 2006;Balcet and Evangelista, 2005;Bertrand and Zuñiga, 2006;Almeida and Fernandes, 2006;Falk and Falk, 2006;Bishop and Wiseman, 1999).…”

Convenient estimators for the panel probit model

“…An empirical example for our discussion of panel probit models is the analysis of rms' innovative activity as a response to imports and foreign direct investment (FDI) as considered in Bertschek (1995). The main hypothesis put forward in that paper is that imports and inward FDI have positive e ects on the innovative activity of domestic rms.…”

Internationalization and the Creation of New Products and Processes in the Mexican Manufacturing Industry

“…However, the majority of these papers refer to the experience of developed countries. An interesting research of a country was done by Bertschek (1995). This author, with data of German companies, found that both FDI and imports have positive effects on the innovative activity of the national productive sector.…”