International and domestic technology transfers and productivity growth: firm level evidence

We examine the impact of international and domestic technology transfers on firms' productivity performance in a sample of 448 Belgian innovating firms during 2003-2006. Technology transfers may occur through R&D contracting, purchase of licenses and know-how, purchase of specialized machinery, hiring of specialized personnel, and various informal channels. Estimates of a dynamic productivity model show that firms engaging in international knowledge transfer strategies record substantially and significantly higher productivity growth. While we do not find statistical evidence of complementarity between international and domestic transfers, the largest impact on productivity is found if firms combine international and domestic transfer strategies, suggesting that a diverse external technology sourcing strategy combining local know-how with know-how from abroad is most effective. Such combined domestic and international technology sourcing strategies are associated with firms' basic research orientation, R&D intensity, and the successful use of technology protection strategies to appropriate the benefits of innovation efforts. Foreign multinational firms are more likely to adopt technology transfer strategies solely focusing on international transfers. Multinational firms do not exhibit faster productivity growth if the effects of technology transfers and R&D are taken into account.