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Export-Led Innovation Among European Firms. Demand and Technological Learning Effects

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This paper investigates the effect of exporting activities on the innovation strategies of European firms in France, Germany, Italy, Spain and UK. The paper puts forward the hypothesis that such a positive effect is driven two main mechanisms. The first is a technological learning effect that allows firms active in international markets to benefit from foreign knowledge spillovers in technologically advanced markets and decrease their research cost for the development of innovations. The second is a demand effect induced by fast-growing foreign markets that increase the potential output of firms. The empirical analysis, which addresses important endogeneity issues related with the strategic choice of the markets of destination operated by firms, shows that the two effects induce the adoption of different innovation strategies. While the technological learning effect positively affect the decision of firms to introduce brand new product innovations, the demand effect fosters the adoption of efficiency and imitation strategies. The paper shows that the effect of exporting activity on innovation strategies crucially depends on the type of export destinations. The lower levels of the technological learning effect which is found among the export destinations of Italian and Spanish firms might represent a possible obstacle for the ability of these countries to increase their future innovative capacities.

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  • Fassio, Claudio, 2015. "Export-Led Innovation Among European Firms. Demand and Technological Learning Effects," SEP Working Papers 2015/2, LUISS School of European Political Economy.
  • Handle: RePEc:ris:sepewp:2015_002
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    More about this item

    Keywords

    Exports; Innovation strategies; European Union economics;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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