Modes of international activities and the innovativeness of firms: an empirical analysis based on the Japanese National Innovation Survey for 2009

We quantitatively examine the factors which account for differences in innovation output depending on the mode of international activities, employing the innovation accounting framework proposed by Mairesse and Mohnen [2001. <italic>To be or not to be innovative: An exercise in measurement</italic>. NBER Working Paper No. 8644. Cambridge, MA: National Bureau of Economic Research; 2002. "Accounting for Innovation and Measuring Innovativeness: An Illustrative Framework and an Application." <italic>American Economic Review</italic> 92 (2): 226-230]. We find that internationally engaged firms use more innovation inputs and generate more innovation outputs. Firms with R&D establishments abroad show the best innovation performance. A significant part of the higher innovation performance of internationally engaged firms can be explained by their greater intra-firm knowledge spillovers, R&D intensity, perceived competitive pressure, and proximity to basic research. However, more importantly, our innovation efficiency analysis suggests that engagement in international activities increases the sales amount of innovative products though it does not necessarily raise the probability that a firm successfully develops a new product or process.