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Productivity of Catalan firms. International exposure and (product) innovation

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Author Info
Cassiman, Bruno () (IESE Business School)
Golovko, Elena (Tilburg University)
Abstract

Exporting firms are typically the more productive firms in an economy. Based on this observation, policy makers typically enact policies to stimulate exportation by domestic firms. In this chapter, we argue that firms make productivity enhancing investments and as a result the more productive firms start an export activity, which might make these firms even more productive. We find evidence of two types of productivity enhancing investments made by Catalan firms: both the fact that a firm imports some of its inputs and that the firm has innovated in the previous year seem to positively affect productivity and, hence, the decision to start exporting. We also find that there is an important difference between the effects of product innovations versus process innovations: product innovations seem to matter more for the export decision of Catalan firms while process innovations have little or no effect on this decision. Overall, we find that importing, innovating and exporting are strongly complementary activities. At the same time, firms develop these activities sequentially. Therefore, it seems that stimulating firms to become active in the international sourcing market and generate (product) innovations might be more productive policy measures than stimulating firms to enter the export market directly.

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Publisher Info
Paper provided by IESE Business School in its series IESE Research Papers with number D/808.

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Length: 30 pages
Date of creation: 17 Jul 2009
Date of revision:
Handle: RePEc:ebg:iesewp:d-0808

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Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
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Related research
Keywords: Firms; Productivity; Catalonia; Innovation;

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References listed on IDEAS
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    Other versions:
  3. Pol Antràs, 2005. "Incomplete Contracts and the Product Cycle," American Economic Review, American Economic Association, vol. 95(4), pages 1054-1073, September. [Downloadable!]
    Other versions:
  4. Lucia Foster & John Haltiwanger & Chad Syverson, 2005. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," Working Papers 05-11, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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  5. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Blackwell Publishing, vol. 62(1), pages 53-82, January. [Downloadable!] (restricted)
  6. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-83, June. [Downloadable!] (restricted)
  7. Aw, Bee Yan & Chen, Xiaomin & Roberts, Mark J., 2001. "Firm-level evidence on productivity differentials and turnover in Taiwanese manufacturing," Journal of Development Economics, Elsevier, vol. 66(1), pages 51-86, October. [Downloadable!] (restricted)
  8. Seev Hirsch & Ilan Bijaoui, 1985. "R&D intensity and export performance: A micro view," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 121(2), pages 238-251, June. [Downloadable!] (restricted)
  9. Rachel Griffith & Elena Huergo & Jacques Mairesse & Bettina Peters, 2006. "Innovation and Productivity Across Four European Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 22(4), pages 483-498, Winter.
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  10. Huergo, Elena & Jaumandreu, Jordi, 2004. "Firms' age, process innovation and productivity growth," International Journal of Industrial Organization, Elsevier, vol. 22(4), pages 541-559, April. [Downloadable!] (restricted)
  11. Markusen, James R. & Venables, Anthony J., 1998. "Multinational firms and the new trade theory," Journal of International Economics, Elsevier, vol. 46(2), pages 183-203, December. [Downloadable!] (restricted)
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  12. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September. [Downloadable!] (restricted)
  13. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, 04. [Downloadable!] (restricted)
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  14. Basile, Roberto, 2001. "Export behaviour of Italian manufacturing firms over the nineties: the role of innovation," Research Policy, Elsevier, vol. 30(8), pages 1185-1201, October. [Downloadable!] (restricted)
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