Global engagement and the innovation activities of firms

Globally engaged firms (multinational enterprises or exporters) tend to have higher productivity than their purely-domestic counterparts. We examine a UK firm data set where we have measures of global engagement linked to innovation/knowledge outputs, knowledge investments, and sources of existing knowledge. We find that globally engaged firms innovate more. But this is not just because globally engaged firms use more researchers. It is also because they learn more from their intra-firm worldwide pool of information (consistent with many recent theories of multi-nationals) and from suppliers, customers and universities. We also find that the relative importance of knowledge sources varies systematically with the type of innovation.