This paper analyses the impact of foreign direct investment (FDI) on the development of local firms. We focus on two likely effects of FDI: a competition effect which deters entry of domestic firms and positive market externalities which foster the development of local industry. Using a simple theoretical model to illustrate how these forces work we show that the number of domestic firms follow...

Armchair evidence shows that many industries are made of a few big commercial or manufacturing firms, which are able to affect the market outcome, and of a myriad of small family-run businesses with very few employees, each of which has a negligible impact on the market. Examples can be found in apparel, catering, publishers and bookstores, retailing, finance and insurances, and IT industries. ...

This paper analyses the impact of foreign direct investment (FDI) on the development of local firms. We focus on two likely effects of FDI: a competition effect which deters entry of domestic firms and positive market externalities which foster the development of local industry. Using a simple theoretical model to illustrate how these forces work we show that the number of domestic firms follow...

For small high-tech firms international orientation is regarded as crucial for growth and long-term survival. Even newly founded technology based firms (NTBFs) are often internationally active shortly after their inception (“born globals”). However, in order to create jobs and have a sustainable influence on (macro)economic development, continuous growth of NTBFs is needed and research must foc...

Theory points to the existence of a ‘learning by exporting effect’, in which exposure to export markets enhances performance through exposure to the knowledge stocks of trading partners. We investigate the learning by exporting hypothesis by examining the effect of exporting on the subsequent innovation performance of UK high-tech SMEs. We find evidence of learning by exporting, but the pattern...

This paper examines strategic investment games between two firms that compete for optimal entry in a project that generates uncertain revenue flows. Under asymmetry on both the sunk cost of investment and revenue flows of the two competing firms, we investigate the value of real investment options and strategic interaction of investment decisions. Compared to earlier models that only allow for ...

We examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation. Recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to R&D. Yet the propensity of semiconductor firms to patent has risen dramatically since the mid1980s. We explore this apparent paradox by conducting intervi...

Investment in transport infrastructure reduces the cost of distance and enables firms to establish contacts over larger distances. Using data from a panel of Spanish manufacturing firms and geographic information system techniques, this article studies the impact of domestic transport cost reductions on firms’ export market participation, taking into account the role of entry costs and other fi...