Local User-Producer Interaction in Innovation and Export Performance of Firms

Local User-Producer Interaction in Innovation and Export Performance of Firms This paper studies the effects of local market attributes on local firms’ exports of innovations. Our starting point are three common hypotheses. First, innovations are a major determinant for the export performance of firms. Second, user–producer interaction is an important factor for successful innovations. Third, user–producer interaction is most efficient in close proximity. Taken together this would mean that intense local user–producer interaction increases exports. This reasoning contradicts a main proposition in international management that overt local responsiveness may be hampering export chances of a firm. In order to generate global innovations, an international firm should look at the world market instead, for instance by identifying the global common denominator of national preferences. Yet, many local innovations have become globally successful. This paper investigates the question to what extent local demand is capable of inducing innovations that are export effective. We utilize data from the German innovation survey of 4,786 firms in the manufacturing and service industries. In this survey firms were asked about the sources of their innovation and their export activities. We find evidence that the export orientation and the domestic demand structure stimulate export success. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Local User-Producer Interaction in Innovation and Export Performance of Firms

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2006 by Springer
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-006-0013-z
Publisher site
See Article on Publisher Site

Abstract

This paper studies the effects of local market attributes on local firms’ exports of innovations. Our starting point are three common hypotheses. First, innovations are a major determinant for the export performance of firms. Second, user–producer interaction is an important factor for successful innovations. Third, user–producer interaction is most efficient in close proximity. Taken together this would mean that intense local user–producer interaction increases exports. This reasoning contradicts a main proposition in international management that overt local responsiveness may be hampering export chances of a firm. In order to generate global innovations, an international firm should look at the world market instead, for instance by identifying the global common denominator of national preferences. Yet, many local innovations have become globally successful. This paper investigates the question to what extent local demand is capable of inducing innovations that are export effective. We utilize data from the German innovation survey of 4,786 firms in the manufacturing and service industries. In this survey firms were asked about the sources of their innovation and their export activities. We find evidence that the export orientation and the domestic demand structure stimulate export success.

Journal

Small Business EconomicsSpringer Journals

Published: Feb 24, 2006

References

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