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The impact of internationalization on innovation at countries’ level: the role of absorptive capacity

Author

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  • Andrea Filippetti
  • Marion Frenzm.frenz
  • Grazia Ietto-Gillies

Abstract

This paper analyses the impact of internationalization on the innovation performance of 40 countries. Internationalization variables are represented by outward and inward foreign direct investment, and by imports and exports; innovation is proxied with triadic patent applications. We take account of the influence of absorptive capacity—in both a linear and non-linear form—in the relationship between internationalization and innovation. Our results suggest that outward FDI is positively associated with patenting. Countries with high absorptive capacity benefit more, though there are diminishing returns. We find there is a negative association between inward FDI and patenting in countries with low absorptive capacity where FDI may displace local infant activities and stun further development of related local knowledge. We find support for the view that the innovation performance of countries with low absorptive capacity benefits from imports as well as from exports.

Suggested Citation

  • Andrea Filippetti & Marion Frenzm.frenz & Grazia Ietto-Gillies, 2017. "The impact of internationalization on innovation at countries’ level: the role of absorptive capacity," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 41(2), pages 413-439.
    • Handle: RePEc:oup:cambje:v:41:y:2017:i:2:p:413-439.
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    File URL: http://hdl.handle.net/10.1093/cje/bew032
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    Cited by:

    1. Arie Y Lewin & Silvia Massini & Carine Peeters, 2020. "Absorptive capacity, socially enabling mechanisms, and the role of learning from trial and error experiments: A tribute to Dan Levinthal’s contribution to international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1568-1579, December.
    2. Razzaq, Asif & An, Hui & Delpachitra, Sarath, 2021. "Does technology gap increase FDI spillovers on productivity growth? Evidence from Chinese outward FDI in Belt and Road host countries," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    3. Xiaoxu Dong & Cheon Yu & Yun Seop Hwang, 2021. "The Effects of Reverse Knowledge Spillover on China’s Sustainable Development: Sustainable Development Indicators Based on Institutional Quality," Sustainability, MDPI, vol. 13(4), pages 1-17, February.
    4. Wei Zhang & Xiuli Zhong & Xue Li, 2024. "The impact of degree of internationalization of MNEs on green innovation performance: The moderating role of absorptive capacity and global dynamic management capability," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 659-675, January.
    5. Ivana Martincevic & Goran Kozina, 2020. "The Relationship Between Technological Dynamics Of New Technologies And Absorptive Capacity Of Export Companies Of The Republic Of Croatia," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 29(2), pages 425-448, december.
    6. Ronald Ebenezer Essel, 2023. "Foreign direct investment, technological spillover, and total factor productivity growth in Ghana," SN Business & Economics, Springer, vol. 3(8), pages 1-34, August.
    7. Mathew, Nanditha & Napolitano, Lorenzo & Rizzo, Ugo, 2020. "The role of domestic-firm knowledge in foreign R&D collaborations: Evidence from co-patenting in Indian firms," MERIT Working Papers 2020-044, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Chung, Doohee & Jung, Haejun & Lee, Yunjeong, 2022. "Investigating the relationship of high-tech entrepreneurship and innovation efficacy: The moderating role of absorptive capacity," Technovation, Elsevier, vol. 111(C).
    9. Soomin Han & Sunghyun Kim, 2023. "Does outward foreign direct investment improve the performance of domestic firms? Case of Korea," Asian Economic Journal, East Asian Economic Association, vol. 37(4), pages 519-549, December.
    10. Marina Papanastassiou & Robert Pearce & Antonello Zanfei, 2020. "Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 623-664, June.
    11. Guimón, José & Chaminade, Cristina & Maggi, Claudio & Salazar-Elena, Juan Carlos, 2018. "Policies to Attract R&D-related FDI in Small Emerging Countries: Aligning Incentives With Local Linkages and Absorptive Capacities in Chile," Journal of International Management, Elsevier, vol. 24(2), pages 165-178.
    12. Alvina Sabah Idrees & Saima Sarwar, 2023. "Spatial convergence clubs and innovation persistence: a country-group comparison of international spatial spillover of innovation capabilities," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(5), pages 4121-4152, October.
    13. Márkus, Gábor & Rideg, András, 2021. "A magyar mikro-, kis- és középvállalatok versenyképessége és pénzügyi teljesítménye [Modelling and empirical analysis of relations between the competence-based competitiveness and financial perform," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 617-644.
    14. Meda Andrijauskiene & Daiva Dumciuviene & Jovita Vasauskaite, 2021. "Redeveloping the National Innovative Capacity Framework: European Union Perspective," Economies, MDPI, vol. 9(4), pages 1-30, December.
    15. Perin, Fernanda & Paranhos, Julia, 2022. "The Internationalisation of the Large Brazilian Pharmaceutical Companies: Challenges, Competitive Advantages and Strategies," CAFE Working Papers 20, Centre for Accountancy, Finance and Economics (CAFE), Birmingham City Business School, Birmingham City University.
    16. Bruno F. Abrantes, 2020. "Are Neoclassic Internationalization Models Enduring? A Case-Review of the Uppsala Paradigm," SAGE Open, , vol. 10(2), pages 21582440209, June.
    17. Kergroach, Sandrine, 2019. "National innovation policies for technology upgrading through GVCs: A cross-country comparison," Technological Forecasting and Social Change, Elsevier, vol. 145(C), pages 258-272.
    18. Aneta Bobeni? Hinto?ová & Michaela Bruothová, 2019. "A link between innovation performance and inward foreign direct investments: A case of Slovakia," Proceedings of International Academic Conferences 9812114, International Institute of Social and Economic Sciences.
    19. von Laer, Maximilian & Blind, Knut & Ramel, Florian, 2022. "Standard essential patents and global ICT value chains with a focus on the catching-up of China," Telecommunications Policy, Elsevier, vol. 46(2).
    20. Qizhen Wang & Qian Zhang, 2022. "Foreign Direct Investment and Carbon Emission Efficiency: The Role of Direct and Indirect Channels," Sustainability, MDPI, vol. 14(20), pages 1-23, October.
    21. Julia Hartmann & Andrew C Inkpen & Kannan Ramaswamy, 2021. "Different shades of green: Global oil and gas companies and renewable energy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(5), pages 879-903, July.

    More about this item

    Keywords

    Internationalization; Trade; Foreign direct investment; Innovation; Patents; Absorptive capacity;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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