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

Abstract

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.