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Internationalisation, Innovation and Productivity: How Do Firms Differ in Italy?

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  • Davide Castellani
  • Antonello Zanfei

Abstract

This paper addresses the issue of intra‐industry heterogeneity and internationalisation. We show that, after controlling for sector, location, firm age and size, Italian manufacturing companies exhibit different economic and innovative performance according to their involvement in foreign activities. In particular, exporters show intermediate innovative performance between non‐internationalised firms and those carrying out foreign production. Multinationals with a lower commitment to foreign markets, i.e. with non‐manufacturing activities abroad only, exhibit a higher productivity than exporters but they do not appear to innovate more than the latter. Heterogeneity in productivity is robust to controlling for innovation inputs and outputs, suggesting that the difference in economic performance cannot be entirely attributed to different innovative activities, and that the involvement in international operations can be a distinct channel of knowledge accumulation.

Suggested Citation

  • Davide Castellani & Antonello Zanfei, 2007. "Internationalisation, Innovation and Productivity: How Do Firms Differ in Italy?," The World Economy, Wiley Blackwell, vol. 30(1), pages 156-176, January.
  • Handle: RePEc:bla:worlde:v:30:y:2007:i:1:p:156-176
    DOI: 10.1111/j.1467-9701.2007.00875.x
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    1. Criscuolo, Chiara & Ralf Martin, 2003. "Multinationals, foreign ownership and US productivity leadership: Evidence from the UK," Royal Economic Society Annual Conference 2003 50, Royal Economic Society.
    2. Roberto Basile & Anna Giunta & Jeffrey Nugent, 2003. "Foreign Expansion by Italian Manufacturing Firms in the Nineties: an Ordered Probit Analysis," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(1), pages 1-24, August.
    3. Girma, Sourafel & Gorg, Holger & Strobl, Eric, 2004. "Exports, international investment, and plant performance: evidence from a non-parametric test," Economics Letters, Elsevier, vol. 83(3), pages 317-324, June.
    4. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
    5. Fors, Gunnar & Svensson, Roger, 2002. "R&D and foreign sales in Swedish multinationals: a simultaneous relationship?," Research Policy, Elsevier, vol. 31(1), pages 95-107, January.
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