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Internationalization and innovation of firms: evidence and policy
[Managing knowledge within and outside the multinational corporation]

Author

Listed:
  • Carlo Altomonte
  • Tommaso Aquilante
  • Gábor Békés
  • Gianmarco I.P. Ottaviano

Abstract

Summary We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European countries (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom). We find strong evidence of positive association among the three firm-level characteristics across countries and sectors. We also find that the positive correlation between internationalization and innovation survives after controlling for productivity, with some evidence of causality running from the latter to the former. Our analysis suggests that export promotion per se is unlikely to lead to sustainable internationalization because internationalization goes beyond export and because, in the medium to long term, internationalization is likely driven by innovation. We recommend coordination and integration of internationalization and innovation policies ‘under one roof’ at both the national and EU levels, and propose a bigger coordinating role for EU institutions.— Carlo Altomonte, Tommaso Aquilante, Gábor Békés and Gianmarco I.P. Ottaviano

Suggested Citation

  • Carlo Altomonte & Tommaso Aquilante & Gábor Békés & Gianmarco I.P. Ottaviano, 2013. "Internationalization and innovation of firms: evidence and policy [Managing knowledge within and outside the multinational corporation]," Economic Policy, CEPR;CES;MSH, vol. 28(76), pages 663-700.
  • Handle: RePEc:oup:ecpoli:v:28:y:2013:i:76:p:663-700.
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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