Learning from Exporting: Roles of Local Knowledge Pool and Absorptive Capacity

Drawing from the recombinatory view of innovation, we argue for a complementarity between learning from exporting and learning from local knowledge pools, suggesting a positive interaction effect between the two sources of learning on firm innovation. We further argue that firms’ absorptive capacity facilitates learning from exporting and also strengthens the effect of complementarity on innovation. Using a novel panel dataset linking China’s census firms to these firms’ innovation outcomes, we find that exporting firms with access to greater local knowledge pools indeed create more product and technological innovation. In addition, firms with higher absorptive capacity benefit more from learning by exporting, and the innovation impacts of the complementarity between international and local knowledge sources are also more pronounced for such firms.