Learning-by-exporting? Examining Firm-level Access and Integration of International Knowledge

Abstract

Drawing on learning and evolutionary theory, this paper explores the nature of the relationship between exporting and innovation performance. We use longitudinal data on German manufacturing firms, collected as part of the European Community Innovation Survey (CIS), to illustrate that, in fact, only some firms significantly benefit from a greater commitment to export markets. We unpack the firm-specific mechanisms that enable some exporters to better access and integrate international knowledge. We find that firms which export beyond their home-region experience stronger learning-by-exporting (LBE) effects due to their access to diverse knowledge, and pressures to identify new solutions to strategic problems. Additionally, in line with our argument that firms are mainly characterized by their routines, we explain how changes in a firm’s internal organizational routines - through organizational innovation (OI) - strengthen the positive relationship between exporting and innovation performance by enabling exporters to evolve and internalize lessons learned from exporting to foreign markets. Whilst firms may often experience trade-offs between key strategic decisions such as exporting and innovating, OI, we propose, serves as an important organizational mechanism to achieve both. Overall, our findings contribute to a nuanced and dynamic understanding of the so-called LBE effect.