Geography, knowledge spillovers and small firms' exports: an empirical examination for The Netherlands

This study examines the impact of external and internal scale economies on the decision to start exporting and the level of exports of innovating firms. Based on new trade theory, increasing returns to scale—both internal and external scale economies— are considered an important source of comparativ...

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Bibliographic Details
Published in:Small business economics 2011-10, Vol.37 (3), p.325-339
Main Authors: van Beers, Cees, van der Panne, Gerben
Format: Article
Language:English
Subjects:
Business and Management
Business innovation
Business management
Business structures
Competitive advantage
Cost of entry
Decision making
Economic theory
Economies of scale
Entrepreneurship
Exporters
Exports
External economies
Geography
Industrial Organization
Innovation
Innovations
International trade
Knowledge
Knowledge transfer
Management
Microeconomics
Netherlands
Probability
Product innovation
Production costs
R&D
Research & development
Small and medium sized enterprises
Small business
Studies
Technological change
Technological innovation
Technology transfer
Trade theory
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Summary:This study examines the impact of external and internal scale economies on the decision to start exporting and the level of exports of innovating firms. Based on new trade theory, increasing returns to scale—both internal and external scale economies— are considered an important source of comparative and competitive advantage. The empirical analysis of (small) innovating firms in The Netherlands leads to two main findings. First, firms that are located in technical Marshallian clusters seem less inclined to become exporters. Availability of technical knowledge alone does not help to reduce entry costs that come with the decision to export and/or marketing and sales costs in order to achieve a higher export performance. Second, firms that experience difficulties in appropriating innovation rents due to labour poaching also seem to be less inclined to become exporters. The explanation for this second finding is the importance of outgoing knowledge spillovers, which is particularly relevant for small, product innovating firms. This reduces their probability to export. However, if firms export, the knowledge leaking argument is not valid for the export performance of the firm.
ISSN:0921-898X
1573-0913
DOI:10.1007/s11187-009-9245-z