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Internationalization and innovation of firms: evidence and policy

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

Abstract

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.

Suggested Citation

  • Altomonte, Carlo & Aquilante, Tommaso & Békés, Gábor & Ottaviano, Gianmarco I. P., 2013. "Internationalization and innovation of firms: evidence and policy," LSE Research Online Documents on Economics 54877, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:54877
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    More about this item

    Keywords

    economic integration; European Union; export; globalization; industrial enterprise; industrial policy; innovation; manufacturing; sustainable development;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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