Learning through foreign market participation: the relative benefits of exporting,importing, and foreign direct investment

A growing literature explores the degree to which firms learn from exporting. Although this literature finds that firms that export subsequently enjoy enhanced innovative performance, there has been little research that compares the effect of exporting to that of alternative internationalization activities. In this paper, we extend the literature to explore theoretically the differential effects of a firm’s exporting, foreign direct investment, and importing activity on its innovative outcomes. We test the resulting hypotheses using a sample of Spanish manufacturing firms from 2000 to 2008. We find that (1) learning associated with exporting is more pronounced than that associated with a firm’s FDI activities, (2) exporting and FDI operate as substitutes in their effect on a firm’s learning, and (3) although importing is positively associated with learning as manifested in new product introductions, it is not associated with learning as manifested in patenting activity.