Learning from yourself or learning from neighbours: knowledge spillovers, institutional context and firm upgrading

ABSTRACT

Using a firm–product-level data set on China’s exports during the period 2000–11, we compare the impacts of intra- and inter-firm knowledge spillovers on the emergence of new, more sophisticated products at the firm level. Empirical results indicate that firm diversification is dependent on both intra- and inter-firm knowledge spillovers, though the effect of the former is much greater. More importantly, intra-firm knowledge spillovers are one key source of firm upgrading. In contrast, inter-firm knowledge spillovers even have some negative impacts on firm upgrading in the Chinese context, though it contributes to firm diversification. We further analyze how the roles of intra- and inter-firm knowledge spillovers in firm upgrading are contingent on regional institutional context.

KEYWORDS:

• knowledge spillover
• technological relatedness
• product sophistication
• firm upgrading
• institutional context

JEL:

• D22
• F23
• L23
• L25

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Natural Science Foundation of China [grant numbers 41701115, 41731278, 41801117 and 41425001] and the Humanity and Social Science Foundation of Ministry of Education of China [grant number 18YJC790240].