Learning by exporting: The contingent role of capabilities
Description
We explore how differences in process and product R&D capabilities influence the extent of learning by exporting (LBE). We theorize two underlying mechanisms that jointly shape LBE. At lower levels of capability, absorptive capacity plays a dominant role, enabling firms to benefit from exposure to export markets. However, at higher capability levels, diminishing returns to R&D become more prominent, moderating the gains from exporting. Using longitudinal data from the Indian pharmaceutical industry, we adopt a novel empirical approach to show that exporting positively contributes to technical efficiency, with the magnitude of this effect increasing with a firm’s ex ante R&D capability. However, when we distinguish between firms at different points along the product and process R&D capability spectrum, the moderating effect of prior R&D on LBE appears to be non-monotonic. Specifically, at lower capability levels, leading firms gain more from exporting than laggards. In contrast, at higher capability levels, laggards experience greater gains than leaders. We discuss the implications of these findings for theory and practice.
Copyright Date
January 2011
Publication Date
1-1-2011
Keywords
Learning by exporting, Indian pharmaceutical industry, R&D capability, Firm-level productivity, Absorptive capacity, Diminishing returns to R&D
Conference
SMS 31st Annual International Conference, Strategic Management Society, 6-9 November, 2011, Miami
