Dipartimento di Ingegneria Gestionale

Microeconomic and macroeconomic implications of firms’ internationalization and innovation strategies: the role of demand and informational barriers

About the project

The research carried out in this project has developed along two main lines, namely a firm-level investigation of the determinants of innovation and export decisions and an investigation of the effects on macroeconomic performance of countries’ global involvement.

Principal Investigators:  Prof. Klaus Desmet (coordinator) and Giulia Felice (Marie Curie fellow – Intra-European Fellowships for Career Development).

Funders: European Commission under the Seventh Framework Programme (N. PIEF-GA-2012- 329153).

Duration: October 2013-September 2015

Partners:Hosting institution: Department of Economics, University Carlos III de Madrid.


Notwithstanding the larger presence of big and more productive firms in foreign markets, and their relatively better performance in innovation (the so called “size premium”), we provide evidence showing that small and medium firms’ activities in foreign markets are both large and relevant, and that exporters are more likely to introduce product innovations than non-exporters also at relatively small firm sizes and productivity levels. Typical supply-side factors are not sufficient alone to explain firms’ behavior. Since innovation, in particular product innovation, partly stems from inter-firm relationships, in this project we investigate, both theoretically and empirically, the role of upstream-downstream relationships in production. Using the European survey EFIGE, we provide some empirical evidence that firms carrying out production to order for foreign firms (“production to order exporters”) are indeed more likely to introduce product innovations than subcontractors for domestic buyers. Following the insights of the firm-level investigation, we have then explored the relationship between a country’s participation in the International Fragmentation of Production (IFP) and its innovativeness measured by patents per capita, by using the recently released WIOT (World Input-Output Tables) data.


Main publications
  • Bratti M. and G. Felice, Product innovation by supplying domestic and foreign markets, International Journal of Industrial Organization (2018), 60, 126-178.
  • Felice G. and L. Tajoli, Global Value Chains Participation and Knowledge Spillovers in Developed and Developing Countries: an Empirical Investigation, European Journal of Development Research (2018), Vol. 30, No.3, 500-532.