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Small Business Economics

, Volume 27, Issue 2–3, pp 207–222 | Cite as

Local User-Producer Interaction in Innovation and Export Performance of Firms

  • Rian Beise-ZeeEmail author
  • Christian Rammer
Article

Abstract

This paper studies the effects of local market attributes on local firms’ exports of innovations. Our starting point are three common hypotheses. First, innovations are a major determinant for the export performance of firms. Second, user–producer interaction is an important factor for successful innovations. Third, user–producer interaction is most efficient in close proximity. Taken together this would mean that intense local user–producer interaction increases exports. This reasoning contradicts a main proposition in international management that overt local responsiveness may be hampering export chances of a firm. In order to generate global innovations, an international firm should look at the world market instead, for instance by identifying the global common denominator of national preferences. Yet, many local innovations have become globally successful. This paper investigates the question to what extent local demand is capable of inducing innovations that are export effective. We utilize data from the German innovation survey of 4,786 firms in the manufacturing and service industries. In this survey firms were asked about the sources of their innovation and their export activities. We find evidence that the export orientation and the domestic demand structure stimulate export success.

Keywords

Foreign Direct Investment Innovation Activity Purchase Power Parity Export Performance Home Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.School of ManagementAsian Institute of TechnologyKlong LuangThailand
  2. 2.Department of Industrial Economics and International ManagementCentre for European Economic Research (ZEW)MannheimGermany

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