Essays on the role of internationalization on the R&D activities
Firms of European small open peripheral economies face an increasing globalization of markets, a strengthening of global value chains, a well documented knowledge and technological gap and these in conjunction to the current crisis at least in the southern part of Europe. These conditions compose a demanding and complex environment within which firms must cope and survive. In this direction, analyzing first and improving in turn competitiveness and productivity of European firms’ has become a primary policy objective of the EU at the national, regional, sectoral and firm level in an attempt to close the growth gap with the United States (Aghion et al., 2008). In this mission, boosting exporting activities and investments in Innovation, R&D and knowledge intensity is of the outmost importance since they are seen as drivers of productivity, growth and competitiveness (EU, 2012). Especially with respect to Greece’s economic outlook and as it has been documented in several European policy documents and analyses, the country’s innovation performance has been consistently characterized as “moderately following” (IUS, 2013) the EU’s innovation leaders. The same picture is sketched with Greek firms’ export performance as a crucial component of its overall competitiveness (European Competitiveness Report, 2012). Examining more closely the relationship between firms’ exporting activities and innovation dynamism, the theoretical and empirical evidence suggests that firms which are presenting innovation activities are more likely to export, more likely to export successfully, and more likely to generate growth from exporting than non-innovating firms (Golovko and Valentini, 2011; Love and Roper, 2013). In other words, innovation and export performance are directly linked with the creation of a sustainable competitive advantage and are considered as a primary precondition for economic growth (Piercy et al., 1998; EU, 2012). More specifically, exporting activities are considered as the primary internationalization mode (Johanson and Valhne, 1977; 2009) and firms’ knowledge and learning processes are expected to play a pivotal part in the internationalization process; firms need to be in a position to apprehend and assimilate new knowledge in order to compete and grow in markets in which they have little or no previous experience (Autio et al. 2000). In this direction, the relationship between the degree of internationalization and the intensity of the production of technological knowledge remains under examination, since the significant heterogeneity in terms of country, industrial distribution, firm size, and other factors has lead to contradictory results (Harris and Li, 2009). In addition, the differential effects of the firms’ environment which in turn can be further specified in various dimensions –such as business culture, organizational characteristics, strategic orientation, national and regional systems of innovation- introduce a significant amount of unobserved heterogeneity in the employed methodological frameworks. At the same time, the causality direction, too closely related to endogeneity issues, between exporting and R&D activities has not been yet addressed adequately. The relevant literature has documented two theoretical strands, the Product Life Cycle and Endogenous Growth theory, which hypothesize on causality direction between exports and R&D activities. More specifically, the Product life cycle theory argues that innovation eventually leads to exporting (Posner, 1961; Vernon, 1966; Krugman, 1979; Dollar, 1986) and this theoretical strand is strongly interrelated with the Market Selection Hypothesis (MSH; Wagner 2007) which favours the argument that exporters have superior performance characteristics than non-exporters. On the other hand, the Endogenous growth models (Grossman and Helpman, 1989, 1990, 1991a; Segerstrom et al., 1990; Young, 1991; Aghion and Howitt, 1998, ch. 11) argue on the reverse direction of causality. The notion behind this is that exporting firms access to foreign markets provides them with feedback from their suppliers and/or customers, which gives them the opportunity to transform this knowledge into innovation. This theoretical strand has been recorded as opposite to the market selection hypothesis and is named Learning by Exporting Hypothesis (LEH; Clerides et al., 1998; Salomon and Shaver, 2005) Both the above hypotheses seem plausible and have been empirically but the relevant literature has provided contradictory results. However, it would only make sense to assume that this causality direction may be not so straightforward since causality may run in both directions that is a two-way linkage between a firm’s exporting and innovating activities may exist (Filipescu et al. 2013). The starting point of this PhD thesis lies on the idea that both these activities may influence each other and therefore, is focused on the investigation of the endogeneity between established knowledge creation processes (R&D activities) and internationalization activities as they are depicted in exporting activities. It is worth mentioning that towards the direction of seeking proof for the existence of an endogenous relationship between R&D activities and exports different methodological approaches have been employed. All of them however, examine the existence of endogeneity between the two main firm activities as well as identifying the appropriate set of determinants for each one of the firms’ activities as the relevant literature dictates. In order to (i) sufficiently address the abovementioned multiple heterogeneity, and (ii) be able to compare them, the present research investigates the interrelationship between R&D and exporting activities on two distinctively different groups of firms. More specifically, two different contextual frameworks are employed, one International and one National. The first group of firms focuses on those firms that are considered to be leaders with respect to R&D investments at a global level. The second group of firms under investigation, concerns the Greek firms which are in turn considered leaders within the national system of innovation they operate but have been consistently characterized as moderately followers within the European context (IUS, 2013). Information for the investigation of the international context was provided by the UK Department of Business, Innovation and Skills (BIS, 2007; 2008). Yet, regarding the national context, a profound lack of information exists both with respect to exporting activities but also with respect to R&D activities at the firm level, which inevitably led to the conducting of a field research at the National Level targeting the Manufacturing Sector. In this line, and in order for the gathered information to be comparable with other European surveys on Innovation and in particular with Community Innovation Survey (CIS), the design of the questionnaire was primarily based on the CIS standards. In addition to the data provided by the National survey, all the financial and other information, including annual expenditures on R&D, for the period 2001-2010 was provided by the electronic database “i-mentor”. Based on this information, a better approximation of R&D performance has become feasible through the construction of Greek R&D active manufacturing firms’ R&D stock (Kumbhakar et al., 2012). The main argument supporting this transformation is that fluctuations in R&D investment flows are more volatile than the knowledge stock acquired from such investments (Dierickx and Cool, 1989). The third chapter of this PhD thesis is devoted in presenting the specificities of the field research, the adopted methodology for the construction of firms’ knowledge stock, along with primary descriptive results sketching the outlook of Greek R&D manufacturing firms. The rest of this PhD thesis involves three essays each one of them examining research questions arising from the endogenous relationship between R&D and export activities.
Internationalization, Exports, Innovation, Manufacturing, Endogeneity, Research and development (R&D), 338.9, Διεθνοποίηση, Εξαγωγές, Καινοτομία, Μεταποίηση, Ενδογένεια, Έρευνα και ανάπτυξη (ETA)
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