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Abstract

Our paper attempts to examine how domestic firms manage to benefit from the export activities of large multinational corporations (MNCs). We analyze export spillovers from MNCs, in which export specific knowledge of MNCs that are experienced on foreign markets may spill over to domestic firms, improving their export performance. Multinational firm has a significant advantage over domestic firm since it can benefit from the existing international network of the entire corporation to start export operations and overcome the fixed costs induced by these activities (Blomstrom and Kokko, 1998). The contacts of domestic firms with export oriented MNCs provide both knowledge about the product and process technologies and international market conditions and access to foreign marketing and distribution networks - for example, foreign preferences regarding design, packaging, and product quality - raising the export and productivity performances in domestic firms through export spillovers. The export activities of MNCs may benefit domestic firms when the export specific knowledge that MNCs are experienced on foreign markets may spill over to domestic firms, allowing them to reduce the cost of access to these markets. By learning from MNCs, domestic SMEs are likely to raise their export propensity or intensify their export volume.

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