International and domestic technology transfers and productivity growth: Empirical evidence for Flanders

We examine the drivers of international and domestic technology transfer strategies of firms and the impact of these transfers on firms’ productivity performance in a sample of 457 Flemish innovating firms during 2003-2006. We use data on innovating firms from the 4th Community Innovation Survey for Flanders. In this survey, responding firms indicate whether they sourced technology externally and if so, whether the source of this technology was domestic or foreign. Technology transfers may occur through R&D contracting, purchase of licenses and know how, purchase of specialized machinery, hiring of specialized personnel, and various informal channels. Estimates of a dynamic productivity model show that firms engaging in international knowledge sourcing strategies record significantly higher productivity growth. The largest impact is found for firms combining foreign transfer strategies with local technology acquisition, suggesting that a diverse external technology strategy combining local technologies as well as know how from abroad is most likely to improve firm performance. Analysis of the drivers of technology sourcing strategies shows that combined technology sourcing strategies are more likely to be adopted by firms that 1) face resource limitations in their innovative effort 2) have a basic research orientation and conduct more R&D 3) successfully use various technology protection strategies to appropriate the benefits of innovation efforts 4) are engaged in international R&D collaboration. Affiliates owned by foreign multinationals and highly export oriented firms are significantly more likely to rely on foreign-only technology acquisitions, but domestic multinational enterprises do not differ significantly from domestic firms in this respect. Although our results are still preliminary, they may suggest that policies to stimulate innovation should pay close attention to the facilitation of international technology acquisitions as they are an important factor in the performance effects of innovation efforts.status: publishe