International and Domestic Technology Transfers and Productivity Growth: Firm Level Evidence

Abstract

We examine the drivers of international and domestic technology transfer strategies of firms and the impact of these transfers on firms’ productivity performance in a sample of 440 Flemish innovating firms during 2003-2006. Technology transfers may occur through R&D contracting, purchase of licenses and know how, purchase of specialized machinery, hiring of specialized personnel, and various informal channels. Analysis of the drivers of technology sourcing strategies shows that combined technology sourcing strategies are more likely to be adopted by firms that 1) face resource limitations in their innovative effort 2) have a basic research orientation and conduct more R&D 3) successfully use various technology protection strategies to appropriate the benefits of innovation efforts 4) are engaged in international R&D collaboration. Estimates of a dynamic productivity model show that firms engaging in international knowledge sourcing strategies record substantially and significantly higher productivity growth. The largest impact is found for firms combining foreign transfer strategies with local technology acquisition, suggesting that a diverse external technology strategy combining local technologies as well as know how from abroad is most likely to improve firm performance.