Drivers and Effects of Internationalising Innovation by SMEs

This paper investigates the drivers and the effects of the internationalisation of innovation activities in SMEs based on a large data set of German firms covering the period 2002-2007. Globalisation is radically reshaping the business environment for SMEs. As a consequence, SMEs in industrialised countries are faced with increasing price and technology competition from large companies in their home markets. At the same time, enterprises from emerging economies start to enter these markets based on price advantages, and their expanding demand of resources increases input prices for many commodities, consequently increasing production costs in industrialised countries.