Does Firms’ Engagement in International Activities Foster Their Innovation and Productivity? ESRI Research Bulletin 2015/1/7

Siedschlag, Iulia and Zhang, Xiaoheng (2015) Does Firms’ Engagement in International Activities Foster Their Innovation and Productivity? ESRI Research Bulletin 2015/1/7. UNSPECIFIED.

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Abstract

Recent theoretical models of international trade and investment have established that firms with international activities are more productive than firms serving only domestic markets. Existing empirical evidence indicates that highly productive firms self-select into exporting and foreign direct investment. However, engagement in international activities is a source of knowledge that could lead to higher productivity. Productivity gains associated with post-entry in international activities are linked to learning from partners in international markets and to competitive pressure. Evidence on productivity dynamics following engagement in international activities is limited and less clear cut. Most existing evidence on innovation and productivity at firm level does not distinguish between firms with international activities and firms that serve only the home market.

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