IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/7307.html
   My bibliography  Save this paper

Drivers and Effects of Internationalising Innovation by SMEs

Author

Listed:
  • Schmiele, Anja
  • Rammer, Christian

Abstract

This paper investigates the drivers and the effects of the internationalisation of innovation activities in SMEs based on a large data set of German firms covering the period 2002-2007. We look at different stages of the innovation process (R&D, design, production and sales of new products, and implementation of new processes) and explore the role of internal resources, home market competition and innovationrelated location advantages for an SME's decision to engage in innovation activities abroad. By linking international innovation activities to firm growth in the home market we try to identify likely internationalisation effects at the firm level. The results show that export experience and experience in knowledge protection are highly important for international innovation activities of SMEs. Fierce home market competition turns out to be rather an obstacle than a driver. High innovation costs stimulate internationalisation of non-R&D innovation activities, and shortage of qualified labour expels production of new products. R&D activities abroad and exports of new products spur firm growth in the home market while there are no negative effects on home market growth from shifting production of new products abroad.

Suggested Citation

  • Schmiele, Anja & Rammer, Christian, 2008. "Drivers and Effects of Internationalising Innovation by SMEs," ZEW Discussion Papers 08-035, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:7307
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/24730/1/dp08035.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bart Verspagen & Wilfred Schoenmakers, 2004. "The spatial dimension of patenting by multinational firms in europe," Journal of Economic Geography, Oxford University Press, vol. 4(1), pages 23-42, January.
    2. Ulrich Schmoch, 2003. "Service marks as novel innovation indicator," Research Evaluation, Oxford University Press, vol. 12(2), pages 149-156, August.
    3. Walter Kuemmerle, 1999. "The Drivers of Foreign Direct Investment into Research and Development: An Empirical Investigation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 1-24, March.
    4. Beise, Marian, 2004. "Lead markets: country-specific drivers of the global diffusion of innovations," Research Policy, Elsevier, vol. 33(6-7), pages 997-1018, September.
    5. Gary A Knight & S Tamar Cavusgil, 2004. "Innovation, organizational capabilities, and the born-global firm," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(2), pages 124-141, March.
    6. Guellec, Dominique & Pottelsberghe de la Potterie, Bruno v., 2001. "The internationalisation of technology analysed with patent data," Research Policy, Elsevier, vol. 30(8), pages 1253-1266, October.
    7. Bas, Christian Le & Sierra, Christophe, 2002. "'Location versus home country advantages' in R&D activities: some further results on multinationals' locational strategies," Research Policy, Elsevier, vol. 31(4), pages 589-609, May.
    8. Hakanson, Lars & Nobel, Robert, 1993. "Foreign research and development in Swedish multinationals," Research Policy, Elsevier, vol. 22(5-6), pages 373-396, November.
    9. Blechinger Doris & Pfeiffer Friedhelm, 1999. "Qualifikation, Beschäftigung und technischer Fortschritt / Skill Structure, Employment and Technological Progress: Empirische Evidenz mit den Daten des Mannheimer Innovationspanels / Empirical Evidenc," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 218(1-2), pages 128-146, February.
    10. Ebling, Günther & Janz, Norbert, 1999. "Export and innovation activities in the German service sector: empirical evidence at the firm level," ZEW Discussion Papers 99-53, ZEW - Leibniz Centre for European Economic Research.
    11. Matthias Almus, 2002. "What characterizes a fast-growing firm?," Applied Economics, Taylor & Francis Journals, vol. 34(12), pages 1497-1508.
    12. Smolny, Werner, 1998. "Innovations, Prices and Employment: A Theoretical Model and an Empirical Application for West German Manufacturing Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 359-381, September.
    13. Pearce, Robert D., 1999. "Decentralised R&D and strategic competitiveness: globalised approaches to generation and use of technology in multinational enterprises (MNEs)," Research Policy, Elsevier, vol. 28(2-3), pages 157-178, March.
    14. Heinz Hollenstein, 2005. "Determinants of International Activities: Are SMEs Different?," Small Business Economics, Springer, vol. 24(5), pages 431-450, June.
    15. Anil K. Gupta & Vijay Govindarajan, 2000. "Knowledge flows within multinational corporations," Strategic Management Journal, Wiley Blackwell, vol. 21(4), pages 473-496, April.
    16. Veugelers, Reinhilde & Cassiman, Bruno, 2004. "Foreign subsidiaries as a channel of international technology diffusion: Some direct firm level evidence from Belgium," European Economic Review, Elsevier, vol. 48(2), pages 455-476, April.
    17. Pearce, Robert & Papanastassiou, Marina, 1999. "Overseas R&D and the strategic evolution of MNEs: evidence from laboratories in the UK," Research Policy, Elsevier, vol. 28(1), pages 23-41, January.
    18. Ito, Banri & Wakasugi, Ryuhei, 2007. "What factors determine the mode of overseas R&D by multinationals? Empirical evidence," Research Policy, Elsevier, vol. 36(8), pages 1275-1287, October.
    19. Bernhard Dachs & Georg Zahradnik, 2008. "Internationalisation of R&D in ICT," Springer Books, in: Huub Meijers & Bernhard Dachs & Paul J. J. Welfens (ed.), Internationalisation of European ICT Activities, chapter 0, pages 157-185, Springer.
    20. Katsoulacos, Y., 1984. "Product innovation and employment," European Economic Review, Elsevier, vol. 26(1-2), pages 83-108.
    21. Tony S. Frost, 2001. "The geographic sources of foreign subsidiaries' innovations," Strategic Management Journal, Wiley Blackwell, vol. 22(2), pages 101-123, February.
    22. Rajneesh Narula & Antonello Zanfei, 2003. "Globalisation of Innovation The Role of Multinational Enterprises," DRUID Working Papers 03-15, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    23. John Cantwell & Lucia Piscitello, 2005. "Recent Location of Foreign-owned Research and Development Activities by Large Multinational Corporations in the European Regions: The Role of Spillovers and Externalities," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 1-16.
    24. Werner Smolny, 1998. "Innovations, Prices and Employment: A Theoretical Model and an Empirical Application for West German Manufacturing Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 359-381, September.
    25. Christian Weikl & Reinhold Grotz, 1999. "Transnational technology transfer of SMEs and its impact on regional development," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 11(4), pages 301-315, October.
    26. MacGarvie, Megan, 2005. "The determinants of international knowledge diffusion as measured by patent citations," Economics Letters, Elsevier, vol. 87(1), pages 121-126, April.
    27. Rian Beise-Zee & Christian Rammer, 2006. "Local User-Producer Interaction in Innovation and Export Performance of Firms," Small Business Economics, Springer, vol. 27(2), pages 207-222, October.
    28. Dunning, John H. & Lundan, Sarianna M., 1998. "The geographical sources of competitiveness of multinational enterprises: an econometric analysis," International Business Review, Elsevier, vol. 7(2), pages 115-133, April.
    29. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
    30. Brouwer, Erik & Kleinknecht, Alfred & Reijnen, Jeroen O N, 1993. "Employment Growth and Innovation at the Firm Level," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 153-159, May.
    31. Veugelers, Reinhilde, 1997. "Internal R & D expenditures and external technology sourcing," Research Policy, Elsevier, vol. 26(3), pages 303-315, October.
    32. Heinz Hollenstein, 2009. "Characteristics of Foreign R&D Strategies of Swiss Firms: Implications for Policy," Chapters, in: Dominique Foray (ed.), The New Economics of Technology Policy, chapter 19, Edward Elgar Publishing.
    33. Peter W Liesch & Gary A Knight, 1999. "Information Internalization and Hurdle Rates in Small and Medium Enterprise Internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(2), pages 383-394, June.
    34. Sumantra Ghoshal & Christopher A Bartlett, 1988. "Creation, Adoption and Diffusion of Innovations by Subsidiaries of Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 365-388, September.
    35. Patel, Pari & Vega, Modesto, 1999. "Patterns of internationalisation of corporate technology: location vs. home country advantages1," Research Policy, Elsevier, vol. 28(2-3), pages 145-155, March.
    36. Peter J. Buckley, 1989. "Foreign Direct Investment by Small- and Medium-Sized Enterprises: The Theoretical Background," Palgrave Macmillan Books, in: The Multinational Enterprise, chapter 2, pages 24-45, Palgrave Macmillan.
    37. Dunning, John H., 1994. "Multinational enterprises and the globalization of innovatory capacity," Research Policy, Elsevier, vol. 23(1), pages 67-88, January.
    38. Gary A Knight & S Tamer Cavusgil, 2004. "Innovation, organizational capabilities, and the born-global firm," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(4), pages 334-334, July.
    39. Fryges, Helmut, 2004. "Productivity, Growth, and Internationalisation: The Case of German and British High Techs," ZEW Discussion Papers 04-79, ZEW - Leibniz Centre for European Economic Research.
    40. Heger, Diana & Kraft, Kornelius, 2008. "A Test of the Quality of Concentration Indices," ZEW Discussion Papers 08-072, ZEW - Leibniz Centre for European Economic Research.
    41. ITO Banri & WAKASUGI Ryuhei, 2007. "Factors Determining the Mode of Overseas R&D by Multinationals: Empirical Evidence," Discussion papers 07004, Research Institute of Economy, Trade and Industry (RIETI).
    42. Mezias, John M., 2002. "How to identify liabilities of foreignness and assess their effects on multinational corporations," Journal of International Management, Elsevier, vol. 8(3), pages 265-282.
    43. Falk, Martin, 1999. "Technological innovations and the expected demand for skilled labour at the firm level," ZEW Discussion Papers 99-59, ZEW - Leibniz Centre for European Economic Research.
    44. Jane W. Lu & Paul W. Beamish, 2001. "The internationalization and performance of SMEs," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 565-586, June.
    45. Phillips McDougall, Patricia & Shane, Scott & Oviatt, Benjamin M., 1994. "Explaining the formation of international new ventures: The limits of theories from international business research," Journal of Business Venturing, Elsevier, vol. 9(6), pages 469-487, November.
    46. Pedersen, Torben & Petersen, Bent, 1998. "Explaining gradually increasing resource commitment to a foreign market," International Business Review, Elsevier, vol. 7(5), pages 483-501, October.
    47. Harvey, Michael & Novicevic, Milorad M., 2000. "Staffing global marketing positions: What we don't know can make a difference," Journal of World Business, Elsevier, vol. 35(1), pages 80-94, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. de Vasconcellos, Silvio Luis & Garrido, Ivan Lapuente & Parente, Ronaldo Couto, 2019. "Organizational creativity as a crucial resource for building international business competence," International Business Review, Elsevier, vol. 28(3), pages 438-449.
    2. Susanne Mueller‐Using & Wieslaw Urban & Jan Wedemeier, 2020. "Internationalization of SMEs in the Baltic Sea Region: Barriers of cross‐national collaboration considering regional innovation strategies for smart specialization," Growth and Change, Wiley Blackwell, vol. 51(4), pages 1471-1490, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anja Schmiele, 2008. "Drivers and Effects of Internationalising Innovation by SMEs," Working Papers id:1547, eSocialSciences.
    2. Schmiele, Anja, 2009. "Drivers for international innovation activities in developed and emerging countries," ZEW Discussion Papers 09-064, ZEW - Leibniz Centre for European Economic Research.
    3. Anja Schmiele, 2012. "Drivers for international innovation activities in developed and emerging countries," The Journal of Technology Transfer, Springer, vol. 37(1), pages 98-123, February.
    4. Marina Papanastassiou & Robert Pearce & Antonello Zanfei, 2020. "Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 623-664, June.
    5. Heinz Hollenstein, 2009. "Characteristics of Foreign R&D Strategies of Swiss Firms: Implications for Policy," Chapters, in: Dominique Foray (ed.), The New Economics of Technology Policy, chapter 19, Edward Elgar Publishing.
    6. Spyros Arvanitis & Heinz Hollenstein, 2006. "Determinants of Swiss firms' R&D activities at foreign locations," KOF Working papers 06-127, KOF Swiss Economic Institute, ETH Zurich.
    7. Pietro Moncada-Paterno-Castello & Peter Voigt & Marco Vivarelli, 2011. "Evolution of Globalised business R&D: Features, drivers, impacts," JRC Working Papers on Corporate R&D and Innovation 2011-02, Joint Research Centre.
    8. Hall, Bronwyn H., 2011. "The internationalization of R&D," MERIT Working Papers 2011-049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. René Belderbos & Bart Leten & Shinya Suzuki, 2017. "Scientific research, firm heterogeneity, and foreign R&D locations of multinational firms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(3), pages 691-711, September.
    10. Lorena D’Agostino, 2015. "The neglected effects of R&D captive offshoring in emerging countries on the creation of knowledge at home," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 61-91, March.
    11. Belderbos, Rene & Leten, Bart & Suzuki, Shinya, 2009. "Does Excellence in Academic Research Attract Foreign R&D?," MERIT Working Papers 2009-066, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    12. Cozza, Claudio & Franco, Chiara & Perani, Giulio, 2018. "R&D endowments at home driving R&D internationalisation: Evidence from the Italian business R&D survey," Technological Forecasting and Social Change, Elsevier, vol. 134(C), pages 277-289.
    13. Andre Jungmittag, 2016. "Techno-Globalisierung," EIIW Discussion paper disbei221, Universitätsbibliothek Wuppertal, University Library.
    14. Castellani, Davide & Pieri, Fabio, 2013. "R&D offshoring and the productivity growth of European regions," Research Policy, Elsevier, vol. 42(9), pages 1581-1594.
    15. Blomkvist, Katarina & Kappen, Philip & Zander, Ivo, 2017. "Gone are the creatures of yesteryear? On the diffusion of technological capabilities in the ‘modern’ MNC," Journal of World Business, Elsevier, vol. 52(1), pages 1-16.
    16. Dettmann, Eva & Lacasa, Iciar Dominguez & Guenther, Jutta & Jindra, Bjorn, 2014. "Детерминанты Зарубежной Технологической Активности В Германии - Количественный Анализ Транснациональных Патентов [Determinants of Foreign Technological Activity in German Regions - A Count Model An," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 8(1), pages 34-51.
    17. Jérôme Danguy, 2017. "Globalization of innovation production: A patent-based industry analysis," Science and Public Policy, Oxford University Press, vol. 44(1), pages 75-94.
    18. Dettmann, Eva & Dominguez Lacasa, Iciar & Günther, Jutta & Jindra, Björn, 2013. "Determinants of Foreign Technological Activity in German Regions – A Count Model Analysis of Transnational Patents (1996-2009)," IWH Discussion Papers 12/2013, Halle Institute for Economic Research (IWH).
    19. Lorena M. D'Agostino & Grazia D. Santangelo, 2012. "The Global Fragmentation of R&D Activities: The Home Region Perspective," DRUID Working Papers 12-06, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    20. Liu, Ting & Li, Xizhuo, 2022. "How Do MNCs Conduct Local Technological Innovation in a Host Country? An Examination From Subsidiaries' Perspective," Journal of International Management, Elsevier, vol. 28(3).

    More about this item

    Keywords

    Internationalisation of Innovation; Globalisation; SMEs; Effects of Innovation; Absorptive Capacities; Market Structure;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:7307. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zemande.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.