The internationalization of corporate activities such as export or outward FDI is expected to provide opportunities for innovation through absorption of knowledge and technology from foreign markets. On the other hand, inward FDI will result in increased participation of foreign capital in domestic firms, providing further opportunities for foreign knowledge transfer and spillover. While the effects of internationalization on a firm's growth and FDI spillovers are well explored topics, there are very few studies on possible complementarity between them. Since the essence of the so-called "learning-from-exporting" can be interpreted as an absorption of international knowledge spillover channeled by the trade of goods, these effects are essentially similar and it is likely that they are either complementary to or a substitute for a firm's growth.
This research explores the relation of using such data of Japanese and foreign firms. We offer new policy implications on the promotion of inward FDI, as well as the internationalization of a wider group of Japanese firms, including SMEs.
July 1, 2010 - March 15, 2011