Drivers and Effects of Internationalising Innovation by SMEs

45 Pages Posted: 6 Aug 2008 Last revised: 19 Aug 2008

See all articles by Christian Rammer

Christian Rammer

ZEW – Leibniz Centre for European Economic Research - Industrial Economics and International Management Research

Anja Schmiele

ZEW – Leibniz Centre for European Economic Research

Date Written: 2008

Abstract

This paper investigates the drivers and the effects of the internationalisation of innovation activities in SMEs based on a large data set of German firms covering the period 2002-2007. We look at different stages of the innovation process (R&D, design, production and sales of new products, and implementation of new processes) and explore the role of internal resources, home market competition and innovationrelated location advantages for an SME's decision to engage in innovation activities abroad. By linking international innovation activities to firm growth in the home market we try to identify likely internationalisation effects at the firm level. The results show that export experience and experience in knowledge protection are highly important for international innovation activities of SMEs. Fierce home market competition turns out to be rather an obstacle than a driver. High innovation costs stimulate internationalisation of non-R&D innovation activities, and shortage of qualified labour expels production of new products. R&D activities abroad and exports of new products spur firm growth in the home market while there are no negative effects on home market growth from shifting production of new products abroad.

Keywords: Internationalisation of Innovation, Globalisation, SMEs, Effects of Innovation, Absorptive Capacities, Market Structure

JEL Classification: F23, L22, L25, O31, O32, O47

Suggested Citation

Rammer, Christian and Schmiele, Anja, Drivers and Effects of Internationalising Innovation by SMEs (2008). ZEW - Centre for European Economic Research Discussion Paper No. 08-035, Available at SSRN: https://ssrn.com/abstract=1207262 or http://dx.doi.org/10.2139/ssrn.1207262

Christian Rammer (Contact Author)

ZEW – Leibniz Centre for European Economic Research - Industrial Economics and International Management Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Anja Schmiele

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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