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

• 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
• ISSN: 0921-898X; 1573-0913
• DOI: 10.1007/s11187-009-9245-z

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.