Learning from Exporting

Learning from Exporting

New Insights, New Perspectives

Robert Salomon

This book explores the relationship between exports and productivity. Whilst a body of research indicates that exporters have superior productivity to non-exporters, received wisdom suggests that this is because productive firms became exporters. Robert Salomon approaches this issue from a different angle. He argues that exporters can access diverse knowledge inputs that are not available in the domestic market, and that this knowledge can spill back to the focal firm and, through learning, can foster increased innovation. Therefore, exporting can also make firms more productive.

Chapter 7: Export Strategy and Innovation

Robert Salomon

Subjects: business and management, international business

Extract

* INTRODUCTION While exporting and firm capabilities may individually and/or jointly impact innovation, substantial heterogeneity exists in export strategies. All firms do not export in the same manner, nor do they export to the same location. As one would expect, these strategies have implications for performance. This chapter explores how exporting strategies affect knowledge flows and thereby influence innovative productivity. It also assesses whether knowledge assimilation capabilities moderate the impact of export strategies on innovation. 7.2 SPILLOVER HETEROGENEITY AMONG EXPORT STRATEGIES Grossman and Helpman (1991) argue that the number of foreign contacts possessed affects the amount of information transferred back to the home country. As one country becomes inextricably tied to another, its ties become more direct, and more knowledge is likely to permeate the boundaries. Therefore, the extent to which a country is tied to another through trade affects the amount of knowledge that spills over: the ‘stock of knowledge capital’ – will be related to the number of contacts that local agents have with their counterparts in the international research and business communities. The number of contacts most probably increases with the extent of commercial exchange (p. 1) the extent of the spillovers between two countries will increase with the volume of their bilateral trade. (pp. 4–5) The same argument can be applied at the firm level. In the strategy literature, for example, scholars have long argued that frequency and intensity of interaction can influence knowledge exchange. In the absence of frequent and intense...

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