The Role of Internationalization as a Determinant of Innovation Performance: An Analysis of 42 Countries

Abstract

This paper analyses the impact of internationalization on the innovation performance of 42 countries. Innovation performance – the dependent variable – is measured by the number of triad patents and PCT applications that originate from a country. The following internationalization variables – independent variables – are used: inward and outward stock of FDI, exports and imports as well as the number of parent companies in a country. Information on patents and the internationalization variables, together with further explanatory variables, including the number of scientific articles and of Internet users in a country, are collected for the years 1990 to 2008. The analysis is done for all countries together and then for two groups of countries clustered on the basis of their GDP per capita. The paper finds support for a positive impact of internationalization on countries’ innovation performance. Our analyses suggest that competing in international markets via outward FDI and exports increases the scope of learning and the need to innovate. We find evidence of a negative relationship between patenting and inward FDI as well as imports.