A firm-level analysis of the impact of internationalization on innovation: a study of five Latin American countries

Abstract

This study examines the effect of internationalization on the innovation performance of companies. Using panel data on firms in Mexico, Colombia, Argentina, Peru and Chile this paper determines the causal impact of internationalization on firm innovation on both the country and the aggregate level through propensity score matching. This makes possible comparisons between different countries and also between a country and the aggregate level results. The paper finds significant “learning-by-doing” effects of internationalization on the probability of acquiring patents abroad and international quality certificates both on the country and on the aggregate level. Those results remain significant after implementing a two-time period propensity score matching method with the aim of examining the long-term effects of internationalization on innovation performance of firms. For the other five innovation measures examined the evidence has been more inconclusive, leading to significant results for some countries and overall, almost all of which are positive, but also leading to some statistically insignificant results.