Internationalisation and Innovation Intensities of Polish Manufacturing Firms: A Close Nexus?

Abstract

Objective: The paper aims at the empirical identification of the nexus between innovation and internationalisation intensities in a sample of Polish manufacturing companies.

Research Design & Methods: Using a unique dataset combining micro-level financial data from InfoCredit and results from an extensive survey we follow the approach of Altomonte, Aquilante, Ottaviano & Bekes (2013). We define innovation and internationalisation intensities and analyse the two dimensions disjointly and then simultaneously use formal econometric tools.

Findings: Both dimensions are closely and robustly correlated. There is some evidence for the causality going from innovation to internationalisation. Polish manufacturing companies have in general low innovation and internationalisation intensity. Rising innovation intensity allows companies to become more internationalised and in particular, it raises their probability of exporting. Mean characteristics of firms, such as employment, sales or productivity, change along the two examined dimensions.

Implications & Recommendations: Our results firmly support the postulates of the heterogeneous firms’ trade theory. The results strongly support the introduction of a new type of economic policy in which internationalisation promotion and innovation promotion are simultaneously targeted at the level of a firm.

Contribution & Value Added: We extensively analyse innovation and internationalisation intensities for manufacturing firms from Poland. Using a logit model we show their impact on the likelihood of exporting. We furthermore apply the classification of exporting firms along temporal and geographical dimensions identifying main features and links to the key dimensions.

Keywords

innovation intensity, Internationalisation intensity, firms heterogeneity, logit model, Poland

References

1. Adams, J., & Jaffe, A. (1996). Bounding the Effects of R&D: An Investigation Using Matched Estab-lishment-Firm Data. The RAND Journal of Economics, 27(4), 700-721.
2. Altomonte, C., Aquilante, T., Ottaviano, G.M., & Bekes, G. (2013). Internationalization and Innova-tion of Firms: Evidence and Policy. Economic Policy, 28(76), 663-700.
3. Aristei, D., Castellani, D., & Franco, Ch. (2013). Firms’ exporting and importing activities: is there a two-way relationship? Review of World Economics, 149(1), 55-84.
4. Aw, B.Y., Roberts, M.J., & Winston, T. (2007). Export Market Participation, Investments in R&D and Worker Training, the Evolution of Firm Productivity. The World Economy, 30(1), 83-104.
5. Aw, B.Y., Roberts, M.J., & Xu, D. (2011). R&DInvestment, Exporting, and Productivity Dynamics. American Economic Review, 101(4), 1312-1344.
6. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.
7. Basile, R. (2001). Export behaviour of Italian manufacturing firms over the nineties: the role of innovation. Research Policy, 30(8), 1185-1201.
8. Becker, S., & Egger, P. (2013). Endogenous product versus process innovation and a firm’s propensity to export. Empirical Economics, 44(1), 329-354.
9. Bernard, A.B., & Jensen, B.J. (1999). Exceptional Exporter Performance: Cause, Effect, or Both?.Journal of International Economics, 47(1), 1-25.
10. Bernard, A.B., Jensen, B.J., & Schott, P.K. (2006). Trade Costs, Firms and Productivity. Journal of Monetary Economics, 53(5), 917-937.
11. Bratti, M., & Felice, G. (2012). Are Exporters More Likely to Introduce Product Innovations?. The World Economy, 35(11), 1559-1598.
12. Brodzicki, T. (2016). Innovation intensity as a driver of firm’s internationalization intensity Evi-dence for Poland. Ekonomia – rynek, gospodarka, społeczeństwo, 46, 11-43.
13. Brodzicki, T., & Ciołek, D. (2016). Determinanty działalności eksportowej polskich firm produkcyjnych. Gospodarka Narodowa, 2, 59-76.
14. Caldera, A. (2010). Innovation and exporting: evidence from Spanish manufacturing firms. Review of World Economy, 146(4), 657-689.
15. Cassiman, B., Golovko, E., & Martinez-Ros, E. (2010). Innovation, exports and productivity. International Journal of Industrial Organization, 28(4), 372-376.
16. Cassiman, B., & Golovko, E. (2011). Innovation and Internationalization Through Exports. Journal of International Business Studies, 42(1), 56-75.
17. Castellani, D., & Zanfei, A. (2007). Internationalisation, Innovation and Productivity: How Do Firms Differ in Italy? The World Economy, 30(1), 156-176.
18. Cieślik, A., Michałek, J.J., & Michałek, A. (2012). Determinanty działalności eksportowej polskich przedsiębiorstw. Gospodarka narodowa, 7, 67-84.
19. Cieślik, A., Michałek, J.J, & Michałek, A. (2014). The Influence of Firm Characteristics and Export Performance in Central and Eastern Europe: Comparisons of Visegrad, Baltic and Caucasus States. Entrepreneurial Business and Economics Review, 2(1), 7-18.
20. Cieślik, A., Michałek, J.J., & Szczygielski, K. (2016). Innovations and Export Performance: Firm-level Evidence from Poland. Entrepreneurial Business and Economics Review, 4(4), 11-28.
21. Cooke, Ph. (2002). Regional innovation systems. The Journal of Technology Transfer, 27(1), 133-145.
22. Damijan, J., Kostevc, C., & Polanec, S. (2010). From Innovation to Exporting or Vice Versa? World Economy, 33(3), 374-398.
23. Dixit, A.K., & Stiglitz, J.E. (1977). Monopolistic competition and optimum product diversity. Ameri-can Economic Review, 67(3), 297-308.
24. Dollar, D. (1986). Technological innovation, capital mobility, and the product cycle in North-South trade. American Economic Review, 76(1), 177-190.
25. Entorf, H., Krader, W., & Pohlmeier, W. (1988). Entscheidungen über Innovation, Beschäftigung und Außenhandel: Empirische Ergebnisse eines simultanen Probitansatzes. In: Kräger H. (ed.). Empirische Wirtschaftsforschung (pp. 27-48). Frankfurt: Empirical Research in Economics.
26. Garcia-Quevedo, J., Pellegrinoa, G., & Vivarellic, M. (2014). R&Ddrivers and age: Are young firms different? Research Policy, 43(9), 1544-1556.
27. Hagemejer, J., & Kolasa, M. (2011). Internationalisation and Economic Performance of Enterprises: Evidence from Polish Firmâ€level Data. World Economy, 34(1), 74-100.
28. Hirsch, S., & Bijaoui, I. (1985). R&DIntensity and export performance: a micro view. Weltwirtschaftliches Archiv, 121(2), 138-151.
29. Hitt, M.A., Bierman, L., Shimizu, K., & Kochhar, R. (2001). Direct and moderating effects of human capital on strategy and performance in professional service firms: A resource-based perspec-tive. Academy of Management Journal, 44(1), 13-28.
30. Jensen, R. & Thursby, M. (1987). A decision theoretic model of innovation, technology transfer, and trade. Review of Economic Studies, 54(4), 631-647.
31. Kafouros, M.I., Buckley, P.J., Sharp, J.A., & Wang, Ch. (2008). The role of internationalization in explaining innovation performance. Technovation, 28(1-2), 63-74.
32. Krugman, P. (1979). Increasing returns, monopolistic competition, and international trade. Journal of International Economics, 9(4), 469-479.
33. Krugman, P. (1980). Scale economies, product differentiation, and the pattern of trade. American Economic Review, 70(5), 950-959.
34. Kumar, N., & Siddharthan, N.S. (1994). Technology, firm size and export behaviour in developing countries: the case of Indian enterprise. Journal of Development Studies, 32(2), 288-309.
35. Leonidou, L.C. (1998). Factors stimulating export business: An empirical investigation. Journal of Applied Business Research, 14(2), 43-68.
36. Lileeva, A., & Trefler, D. (2010). Improved access to foreign markets raises plant-level productivity for some plants. The Quarterly Journal of Economics, 125(3), 1051-1099.
37. McFadden, D. (1974). On Conditional logit model of qualitative choice behaviour. In: Zarembka, P. (ed.), Frontiers in Econometrics (pp. 105-142). New York: Academic Press.
38. Melitz, M.J. (2003). The Impact of Trade on Intraâ€industry Reallocations and Aggregate Industry Productivity. Econometrica, 71(6), 1695-1725.
39. Monreal-Perez, J., Aragon-Sanchez, A., & Sanchez-Marin, G. (2012). A longitudinal study of the relationship between export activity and innovation in the Spanish firm: The moderating role of productivity. International Business Review, 21, 862-877.
40. Nassimbeni, G. (2001). Technology, innovation capacity, and the export attitude of small manufacturing firms: a logit/tobit model. Research Policy, 30, 245-262.
41. Nelson, R.R. (1991). Why do firms differ, and how does it matter? Strategic Management Journal, 12(S2), 61-74.
42. Onkelinx, J., & Sleuwaegen, L.E. (2010). Internationalization strategy and performance of small and medium-sized enterprises. National Bank of Belgium Working Paper, no. 197.
43. Posner, M.V. (1961). International trade and technical change. Oxford Economic Papers, 13(3), 323-341.
44. Roper, S., & Love, J.H. (2002). Innovation and export performance: evidence from the UK and German manufacturing plants. Research Policy, 31, 1087-1102.
45. Salomon, R.M., & Shaver, M.J. (2005). Learning by exporting: New insights from examining firm innovation. Journal of Economics and Management Strategy, 14(2), 431-460.
46. Segerstrom, P.S., Anant, T.C.A., & Dinopoulos, E. (1990). A Schumpeterian model of the product life cycle. American Economic Review, 80(5), 1077-1091.
47. Sterlacchini, A. (1999). Do innovative activities matter to small firms in non-R&D-intensive industries? An application to export performance. Research Policy 28(8), 819-832.
48. Tidd, J., & Bessant, J. (2009). Managing innovation. Integrating Technological, Market and Organi-zational Change. Haddington: Wiley and Sons.
49. Trefler, D. (2004). The Long and Short of the Canada-U.S. Free Trade Agreement. American Eco-nomic Review, 94(4), 870-895.
50. Van Beveren, I., & Vandenbussche, H. (2010). Product and process innovation and firms’ decision to export. Journal of Economic Policy Reform, 13(1), 3-24.
51. Vernon, R. (1966). International investment and international trade in the product cycle. Quarterly Journal of Economics, 80(2), 190-207.
52. Wach, K. (2015). Entrepreneurial Orientation and Business Internationalisation Process: The Theo-retical Foundations of International Entrepreneurship. Entrepreneurial Business and Econom-ics Review, 3(2), 9-24.
53. Wakelin, K. (1998). Innovation and export behaviour at the firm level. Research Policy, 26, 829-841.
54. Wooldridge, J. M. (2003). Introductory econometrics: a modern approach, ed. 2, South-Western.