New Ventures' Export Orientation: Outcome and Source of Knowledge Spillovers

In this paper we draw on knowledge spillover literature to suggest that a country’s proportion of exportoriented new ventures, compared to its total number of new ventures, represents an outcome of knowledge spillovers (export spillovers) that stem from foreign direct investment (FDI) and international trade, as well as a source of knowledge spillovers (entrepreneurship spillovers) that positively influence the country’s total level of entrepreneurial activity. We distinguish between higher-income and lower-income countries, because the latter are less integrated into the world economy. To test the hypotheses, we use macro-level data from 34 countries during the period 2002–2005. After controlling for relevant factors such as size of the domestic market and industry structure, we find that the relationship between FDI and international trade on the one hand and a country’s proportion of export-oriented new ventures on the other differs for higherand lower-income countries. In addition, a country’s proportion of export-oriented new ventures affects the subsequent emergence of new businesses. These findings have important implications for research and practice. This is an update of paper H200619.