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International Firm Activities and Innovation: Evidence from Knowledge Production Functions for German Firms

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  • Joachim Wagner

    () (Institute of Economics, University of Lüneburg)

Abstract

Using a knowledge production framework and a rich set of plant level data this study demonstrates that in Germany firms that are active on international markets as exporters or foreign direct investors do generate more new knowledge than firms which sell on the national market only. These differences are not only due to a larger firm size, or different industries, or the use of more researchers in these firms, but due to the fact these globally engaged firms learn more from external sources, too. The importance of these knowledge sources varies with the type of innovation. These results, which are broadly in line with the findings of a recent study using UK firm level data, can help to explain the strong positive correlation between productivity and international activities of firms. Firms that are active on markets beyond the national borders generate higher levels of new knowledge that feed into higher productivity.

Suggested Citation

  • Joachim Wagner, 2006. "International Firm Activities and Innovation: Evidence from Knowledge Production Functions for German Firms," Working Paper Series in Economics 25, University of Lüneburg, Institute of Economics.
  • Handle: RePEc:lue:wpaper:25
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    References listed on IDEAS

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    1. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
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    Citations

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    Cited by:

    1. Joachim Wagner, 2010. "Entry, Exit and Productivity: Empirical Results for German Manufacturing Industries," German Economic Review, Verein für Socialpolitik, vol. 11, pages 78-85, February.
    2. Ingrid Ott & Susanne Soretz, 2006. "Governmental activity, integration, and agglomeration," Working Paper Series in Economics 57, University of Lüneburg, Institute of Economics.
    3. Wagner, Joachim, 2007. "Why More West than East German Firms Export," IZA Discussion Papers 2656, Institute for the Study of Labor (IZA).
    4. Nils Braakmann, 2007. "Struktur und Erfolg von Ich-AG-Gründungen - Ergebnisse einer Umfrage im Arbeitsagenturbezirk Lüneburg," Working Paper Series in Economics 56, University of Lüneburg, Institute of Economics.
    5. Görg, Holger & Hanley, Aoife, 2017. "Globalization: Implications for firms in Germany," KCG Working Papers 5, Kiel Centre for Globalization (KCG).
    6. Jaan Masso & Tõnu Roolaht & Urmas Varblane, 2010. "Foreign Direct Investment And Innovation In Central And Eastern Europe: Evidence From Estonia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 67, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    7. Chrsitiane Clemens & Maik Heinemann, 2007. "Credit Constraints, Idiosyncratic Risks, and the Wealth Distribution in a Heterogeneous Agent Model," Working Paper Series in Economics 46, University of Lüneburg, Institute of Economics.
    8. Ingrid Ott & Susanne Soretz, 2006. "Governmental activity and private capital adjustment," Working Paper Series in Economics 26, University of Lüneburg, Institute of Economics.
    9. Wan-Hsin Liu, 2014. "Relevance of Own R&D and Sources of Knowledge Transfer for Industrial Innovation in China," The Developing Economies, Institute of Developing Economies, vol. 52(1), pages 1-25, March.
    10. Shin, Inyong & Kim, Hyunho, 2010. "The effect of subsidy policies on the product quality improvement," Economic Modelling, Elsevier, vol. 27(3), pages 687-696, May.
    11. Jan Kranich & Ingrid Ott, 2007. "Regionale Spitzentechnologie auf internationalen Märkten," Working Paper Series in Economics 52, University of Lüneburg, Institute of Economics.
    12. Sourafel Girma & Holger Görg & Aoife Hanley, 2008. "R&D and Exporting: A Comparison of British and Irish Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(4), pages 750-773, December.
    13. Joachim Wagner, 2007. "Productivity and Size of the Export Market Evidence for West and East German Plants, 2004," Papers on Entrepreneurship, Growth and Public Policy 2007-13, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    14. Helmut Fryges & Joachim Wagner, 2008. "Exports and Productivity Growth: First Evidence from a Continuous Treatment Approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(4), pages 695-722, December.
    15. Ingrid Ott & Susanne Soretz, 2006. "Nachhaltige Entwicklung durch endogeneUmweltwahrnehmung," Working Paper Series in Economics 24, University of Lüneburg, Institute of Economics.
    16. Joachim Wagner, 2007. "Jobmotor Mittelstand?: Arbeitsplatzdynamik und Betriebsgröße in der westdeutschen Industrie," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 76(3), pages 76-87.
    17. Baumgärtner, Stefan & Jöst, Frank & Winkler, Ralph, 2009. "Optimal dynamic scale and structure of a multi-pollution economy," Ecological Economics, Elsevier, vol. 68(4), pages 1226-1238, February.
    18. Schmeiser, Katherine N. & Ricaurte, Miguel F., 2012. "Tradability and market penetration costs: Explaining foreign market servicing intensities," International Review of Economics & Finance, Elsevier, vol. 22(1), pages 190-200.
    19. Schmidt, Gabriela & Trofimenko, Natalia, 2010. "Linkages between technology choice and exporting: Evidence from Argentina," Kiel Working Papers 1620, Kiel Institute for the World Economy (IfW).
    20. Görg, Holger & Hanley, Aoife, 2017. "Globalization: Implications for firms in Germany," Working Papers 04/2017, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.

    More about this item

    Keywords

    Exports; foreign direct investment; knowledge production function; Germany;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • 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

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