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Follow me to the innovation frontier? Leaders, laggards, and the differential effects of imports and exports on technological innovation

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  • Sheryl Winston Smith

    (Department of Strategic Management, Fox School of Business, Temple University, Philadelphia, USA)

Abstract

International trade and R&D offer significant opportunities for knowledge transfer through exports, but simultaneously increase potential competition through imports. In this paper, the author examines industry-level heterogeneity in the relationship between domestic innovation and international trade. Using a model of innovation in the global economy and a novel measure of relative industry strength, the paper examines differential effects of exports and imports in high-technology industries. These relationships are tested empirically using panel data from four high-technology industries in the US over the period 1973–2001. In industries that are relative global leaders, the empirical evidence points to gains from both exporting and importing. On the other hand, in industries that are relative global laggards, the results are more fluid. The author finds that exporting contributes favorably to domestic innovation in both leading and lagging industries when foreign R&D is at its maximum; at lower levels of knowledge abroad, however, the net effect of exporting on lagging industries is negative. Results for importing are likewise nuanced. In industries that are relative leaders, increasingly sophisticated imports lead to greater domestic innovation when industry structure is more concentrated, providing a competitive kick-start. In industries that are relative laggards, this effect is not present.

Suggested Citation

  • Sheryl Winston Smith, 2014. "Follow me to the innovation frontier? Leaders, laggards, and the differential effects of imports and exports on technological innovation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(3), pages 248-274, April.
    • Handle: RePEc:pal:jintbs:v:45:y:2014:i:3:p:248-274
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    Cited by:

    1. René Belderbos & Vincent Van Roy & Leo Sleuwaegen, 2021. "Does trade participation limit domestic firms’ productivity gains from inward foreign direct investment?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 83-109, March.
    2. Segundo Camino‐Mogro & Paul Carrillo‐Maldonado, 2023. "Do imports of intermediate inputs generate higher productivity? Evidence from Ecuadorian manufacturing firms," The World Economy, Wiley Blackwell, vol. 46(5), pages 1471-1521, May.
    3. Ksenia Gonchar & Boris Kuznetsov, 2018. "How import integration changes firms’ decisions to innovate," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 60(3), pages 501-528, May.
    4. Sunil Kanwar, 2022. "Innovation and Government Bureaucracy," Working papers 328, Centre for Development Economics, Delhi School of Economics.
    5. René Belderbos & Boris Lokshin & Bert Sadowski, 2015. "The returns to foreign R&D," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(4), pages 491-504, May.
    6. Smallbone, David & Saridakis, George & Abubakar, Yazid Abdullahi, 2022. "Internationalisation as a stimulus for SME innovation in developing economies: Comparing SMEs in factor-driven and efficiency-driven economies," Journal of Business Research, Elsevier, vol. 144(C), pages 1305-1319.
    7. Ayse Ozturk & S. Tamer Cavusgil & O. Cem Ozturk, 2021. "Consumption convergence across countries: measurement, antecedents, and consequences," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(1), pages 105-120, February.
    8. Minjie Li & Mengjun Meng & Yihui Chen, 2024. "The impact of the digital economy on green innovation: the moderating role of fiscal decentralization," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-33, April.
    9. Fei Peng & Lili Kang & Taoxiong Liu & Jia Cheng & Luxiao Ren, 2020. "Trade Agreements and Global Value Chains: New Evidence from China’s Belt and Road Initiative," Sustainability, MDPI, vol. 12(4), pages 1-24, February.
    10. Ning, Lutao & Guo, Rui & Chen, Kaihua, 2023. "Does FDI bring knowledge externalities for host country firms to develop complex technologies? The catalytic role of overseas returnee clustering structures," Research Policy, Elsevier, vol. 52(6).
    11. Tao Wang & Ting Zhang & Zhigang Shou, 2021. "The double-edged sword effect of political ties on performance in emerging markets: The mediation of innovation capability and legitimacy," Asia Pacific Journal of Management, Springer, vol. 38(3), pages 1003-1030, September.
    12. Jürgen Janger & Agnes Kügler & Andreas Reinstaller & Fabian Unterlass, 2017. "Austria 2025 – Looking Out For the Frontier(s): Towards a New Framework For Frontier Measurement in Science, Technology and Innovation," WIFO Studies, WIFO, number 59289, February.
    13. Zhenzhen Xie & Jiatao Li, 2018. "Exporting and innovating among emerging market firms: The moderating role of institutional development," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 222-245, February.
    14. Gregorio Sánchez-Marín & María Pemartín & Joaquín Monreal-Pérez, 2020. "The influence of family involvement and generational stage on learning-by-exporting among family firms," Review of Managerial Science, Springer, vol. 14(1), pages 311-334, February.
    15. Bahl, Mona & Lahiri, Somnath & Mukherjee, Debmalya, 2021. "Managing internationalization and innovation tradeoffs in entrepreneurial firms: Evidence from transition economies," Journal of World Business, Elsevier, vol. 56(1).
    16. Han Liang & Gang Liu & Jianling Yin, 2019. "Venture capital reputation: a blessing or a curse for entrepreneurial firm innovation—a contingent effect of industrial distance," Frontiers of Business Research in China, Springer, vol. 13(1), pages 1-25, December.
    17. Wu, Jie & Ma, Zhenzhong & Liu, Zhiyang, 2019. "The moderated mediating effect of international diversification, technological capability, and market orientation on emerging market firms' new product performance," Journal of Business Research, Elsevier, vol. 99(C), pages 524-533.
    18. René Belderbos & Boris Lokshin & Federico Michiel, 2021. "R&D and Foreign Subsidiary Performance at or Below the Technology Frontier," Management International Review, Springer, vol. 61(6), pages 745-767, December.
    19. Lee, Jeoung Yul & Jiménez, Alfredo & Yang, Young Soo & Irisboev, Ilkhom, 2022. "The evolution of emerging market firms and time until subsidiary exit: Competitive dynamics of domestic market followers and contingency factors," Journal of Business Research, Elsevier, vol. 145(C), pages 694-704.

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