Learning from Exporting
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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.
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Chapter 3: Market Contact and Knowledge Sourcing

Robert Salomon


3.1 INTRODUCTION This chapter addresses a particular stream in the international business literature that advances the argument that the sourcing of knowledge via foreign market participation helps to inform the innovation production function of the focal firm. While under certain circumstances firms acquire knowledge and technologies by investing abroad, we know less about whether firms can absorb knowledge outside their national borders without making such cross-border investments. I will argue that exporting firms stand to gain some of the same knowledge-based advantages associated with asset-seeking FDI, without having to make the capital investment. 3.2 ASSET-SEEKING AND FOREIGN DIRECT INVESTMENT A basic premise of research on multinational firms is that in order to succeed internationally, a firm must possess certain advantageous assets and capabilities (Hymer, 1970, 1976; Buckley and Casson, 1976). This advantage is initially developed in domestic operations. Once the firm develops a competitive advantage in the home country, it can then exploit these advantages in other countries. This has been referred to as an assetbased (or internalization) theory of international expansion; that is, firms with valuable intangible assets and capabilities are most likely to benefit from international operations (Caves, 1996; Morck and Yeung, 1991, 1992). Recently, scholars have offered an alternative inducement to engaging in foreign direct investment. Researchers have argued that since parent firms can access knowledge from various subsidiaries within a multinational corporation (MNC), a firm may expand in order to source knowledge residing in foreign countries by filtering it through its subsidiaries (for example,...

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