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An international multilevel analysis of product innovation


  • Daniel Lederman

    (Development Economics Research Group, The World Bank, Washington, DC, USA)


This paper studies multilevel determinants of product innovation by incumbent firms with data from 68 countries, covering over 25,000 firms in eight manufacturing sectors. The author assesses the predictions of interdisciplinary research on firm behavior in different contexts, which have emphasized that product innovation is affected by three sets of factors: the extent of global engagement, information spillovers, and market structure. The empirical model of the probability of observing a product innovation, a probit model, by a firm considers three levels of analysis: firm characteristics, industry characteristics, and the national context. The econometric evidence supports the global engagement and information spillovers hypotheses, but the evidence on the role of market structure is mixed. Regarding global engagement, the evidence suggests that product innovation by incumbent firms is positively correlated with the act of investing in R&D and licensing of foreign technologies, and country-level average import tariffs reduce the probability of product innovation. Regarding information spillovers, the evidence also shows that a country's patent density is positively correlated with product innovation. In contrast, concerning the market structure hypotheses, country-level indicators of business density and of policy-induced costs of entry are not robustly correlated with product innovation.

Suggested Citation

  • Daniel Lederman, 2010. "An international multilevel analysis of product innovation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(4), pages 606-619, May.
  • Handle: RePEc:pal:jintbs:v:41:y:2010:i:4:p:606-619

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    Cited by:

    1. Martin Srholec, 2011. "A multilevel analysis of innovation in developing countries ," Industrial and Corporate Change, Oxford University Press, vol. 20(6), pages 1539-1569, December.
    2. Andersson, Ulf & Dasí, Àngels & Mudambi, Ram & Pedersen, Torben, 2016. "Technology, innovation and knowledge: The importance of ideas and international connectivity," Journal of World Business, Elsevier, vol. 51(1), pages 153-162.
    3. Krammer, Sorin & Jimenez, Alfredo, 2019. "Do political connections matter for firm innovation? Evidence from emerging markets in Central Asia and Eastern Europe," MPRA Paper 94942, University Library of Munich, Germany.
    4. Liu, Xiaohui & Hodgkinson, Ian R. & Chuang, Fu-Mei, 2014. "Foreign competition, domestic knowledge base and innovation activities: Evidence from Chinese high-tech industries," Research Policy, Elsevier, vol. 43(2), pages 414-422.
    5. Barros, Henrique M., 2011. "The Effects of Innovation Partnership, Foreign Ownership and Enhanced Management Practices on the Use of Patents in Brazilian Manufacturing," Insper Working Papers wpe_255, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    6. Xie, Zhenzhen & Li, Jiatao, 2015. "Demand Heterogeneity, Learning Diversity and Innovation in an Emerging Economy," Journal of International Management, Elsevier, vol. 21(4), pages 277-292.
    7. Brian T. McCann & Mona Bahl, 2017. "The influence of competition from informal firms on new product development," Strategic Management Journal, Wiley Blackwell, vol. 38(7), pages 1518-1535, July.
    8. Shepherd, Ben & Stone, Susan, 2012. "Imported intermediates, innovation, and product scope: Firm-level evidence from developing countries," MPRA Paper 41704, University Library of Munich, Germany.
    9. Juana Sanchez, 2014. "Innovation Output Choices And Characteristics Of Firms In The U.S," Working Papers 14-42, Center for Economic Studies, U.S. Census Bureau.
    10. ONISOR Lucian-Florin & CRISTEA Silvia-Lucia, 2012. "Correlation Of Legal Aspects And Marketing Techniques In The Granting Process Of Patents, Trade Marks And Copyright In Romania, The European Community, United States Of America, Japan And Korea," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 0(3), pages 288-295.
    11. Onisor Lucian-Florin, 2012. "Marketing And Innovation: Young People'S Attitude Towards New Products," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 1179-1186, July.
    12. Pierluigi Montalbano & Silvia Nenci & Carlo Pietrobelli, 2014. "International Linkages, Value Added Trade and LAC Firms' Productivity," Departmental Working Papers of Economics - University 'Roma Tre' 0198, Department of Economics - University Roma Tre.
    13. Melnyk, Valentyna & Giarratana, Marco & Torres, Anna, 2014. "Marking your trade: Cultural factors in the prolongation of trademarks," Journal of Business Research, Elsevier, vol. 67(4), pages 478-485.
    14. Patrícia Lopes Costa & Ana Margarida Graça & Pedro Marques-Quinteiro & Catarina Marques Santos & António Caetano & Ana Margarida Passos, 2013. "Multilevel Research in the Field of Organizational Behavior," SAGE Open, , vol. 3(3), pages 21582440134, August.
    15. Weilei (Stone) Shi & Sunny Li Sun & Daying Yan & Zhu Zhu, 2017. "Institutional fragility and outward foreign direct investment from China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(4), pages 452-476, May.
    16. Brian T. McCann & George A. Shinkle, 2017. "Attention to Fairness versus Profits: The Determinants of Satisficing Pricing," Journal of Management Studies, Wiley Blackwell, vol. 54(5), pages 583-612, July.
    17. Krammer, Sorin M.S. & Jiménez, Alfredo, 2020. "Do political connections matter for firm innovation? Evidence from emerging markets in Central Asia and Eastern Europe," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    18. Michaela Wrede & Tobias Dauth, 2020. "A temporal perspective on the relationship between top management team internationalization and firms' innovativeness," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 542-561, June.
    19. Nguyen, Ngoc Anh & Doan, Quang Hung & Nguyen, Ngoc Minh & Tran-Nam, Binh, 2016. "The impact of petty corruption on firm innovation in Vietnam," MPRA Paper 71902, University Library of Munich, Germany.
    20. Jun Wen & Mingbo Zheng & Gen-Fu Feng & Sunwu Winfred Chen & Chun-Ping Chang, 2018. "Corruption And Innovation: Linear And Nonlinear Investigations Of Oecd Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(01), pages 103-129, July.
    21. Ma, Li & Zhai, Xin & Zhong, Weiguo & Zhang, Zhi-Xue, 2019. "Deploying human capital for innovation: A study of multi-country manufacturing firms," International Journal of Production Economics, Elsevier, vol. 208(C), pages 241-253.

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