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R&D, internationalization and growth of newly listed firms: European evidence


The initial public offering (IPO) is an important stage in the life cycle of privately held and entrepreneurial firms. For innovative firms eager to capitalize on their technological advances, an IPO represents a springboard for a rapid international expansion of sales. However, there is little research on the longer-term, post-IPO strategic evolution of newly listed companies, including their internationalization. We build on international entrepreneurship and dynamic capabilities perspectives and examine interrelationships between R&D, exporting and growth of newly listed firms in the UK, Germany, Italy and France. Using panel data for 1110 IPOs during the period 1985–2004, we found that R&D intensity is an important antecedent factor for internationalization of sales. Both R&D and export intensities have a positive effect on the sales growth of newly listed firms. However, R&D intensity is path dependent, and is determined by levels of accumulated intangible assets and debt. In terms of time dynamics, the growth of IPO firms is at its highest level just after the float, whereas export intensity increases as IPO firms mature. We conclude that managers and IPO investors need to take into account not only growth opportunities but also past innovation strategies and financial constraints on managers' strategic choices.

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Figure 1


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    Firms should also make sure these returns will compensate for liabilities of “foreignness” and other costs associated with an entry into foreign markets.

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    Seemingly unrelated estimation (SURE) would have been adequate if the causal chain was truly recursive, but the non-zero off-diagonal elements in the covariance matrix require a three-stage least squares approach.


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An earlier version of this paper was presented at the 2006 Academy of Management Conference (Atlanta, USA) and Annual Conference on Corporate Strategy (Berlin, May 2006). We are grateful to Mike Wright, Keith Brouthers, Arie Lewin, Salim Chahine, Erkko Autio, Ron Smith, Ruth Aguilera, Torben Pedersen, Witold Henisz (the Editor) and four anonymous referees for their insightful comments. We thank George Dampare for the data.

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Correspondence to Igor Filatotchev.

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Accepted by Torben Pedersen, Former Editor, and Witold Henisz, Area Editor, 23 December 2008. This paper has been with the authors for four revisions.

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Filatotchev, I., Piesse, J. R&D, internationalization and growth of newly listed firms: European evidence. J Int Bus Stud 40, 1260–1276 (2009). https://doi.org/10.1057/jibs.2009.18

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  • innovation and R&D
  • capabilities and capability development
  • initial public offerings
  • exports