From new to the firm to new to the world. Effect of geographical proximity and technological capabilities on the degree of novelty in emerging economies

This paper investigates empirically what it takes for a firm to move from new to the firm to new to the domestic market and new to the world innovations. More specifically, the paper analyses the relationship between, on the one hand, the degree of novelty of product innovation and on the other hand the accumulation of technological capabilities at firm level as well as the geographical spread of the innovation activities of the firm. The analysis is based on a unique firm level data collected in Pune(India) and Beijing (China) in 2008. The paper shows that the role of the region supporting the move from new to the firm to new to the world is limited. In order to achieve a higher degree of innovation global networks are more important than local networks.