Knowledge, Innovation and Space
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Knowledge, Innovation and Space

Edited by Charlie Karlsson, Börje Johansson, Kiyoshi Kobayashi and Roger R. Stough

The contributions in this volume extend our understanding about the different ways distance impacts the knowledge conversion process. Knowledge itself is a raw input into the innovation process which can then transform it into an economically useful output such as prototypes, patents, licences and new companies. New knowledge is often tacit and thus tends to be highly localized, as indeed is the conversion process. Consequently, as the book demonstrates, space or distance matter significantly in the transformation of raw knowledge into beneficial knowledge.
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Chapter 5: The influence of knowledge on firms’ export decisions

Sara Johansson


The rapid growth in international trade flows implies that domestic market shares are shrinking as foreign firms increasingly penetrate domestic markets. Consequently, the globalization process stimulates more and more firms to enter foreign markets to explore business opportunities abroad and to compensate for reduced domestic sales. Despite many push and pull factors, many firms still do not participate in international markets, and of the majority of firms that do, only a few export products to a limited number of foreign markets (Andersson et al., 2008; Bernard et al., 2003). The fact that not all firms explore business opportunities abroad can be explained by a fixed investment required to establish an export link. A growing vein of theoretical and empirical literature focuses on the effects of fixed export market entry costs on firms’ export behavior (Bernard and Jensen, 1995; 1999; 2004; Girma et al., 2004; Greenaway and Kneller, 2005; Helpman et al., 2004; Melitz, 2003; Roberts and Tybout, 1997; Sjoholm, 1999; among others). Theoretical and empirical work in this field suggests that only the most productive firms can overcome the fixed cost of export market entry. Consequently, the most productive firms self-select into export market participation. Studies on firm-level export behavior find that firm characteristics such as size, productivity, human capital, R & D investments, and age are important determinants of firms’ export status (Baldwin and Gu, 2003; Bernard and Jensen, 1995, 1999, 2004; Clerides et al., 1998; Roberts and Tybout, 1997).

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