Time to come back: the effects of export market re-entry and time-out period on innovation

What the paper says

Purpose The purpose of this paper is to examine how exporters’ time-out periods and re-entry to various export areas impact their knowledge stock and capacity to learn from foreign markets. Design/methodology/approach This paper introduces the concept of innovation divergent export areas (IDEXAs), which refers to a group of countries with relatively similar average levels of innovation capabilities (intra-area homogeneity), and different from other areas (inter-area heterogeneity), as measured by their R&D expenditures over gross domestic product (GDP). This paper tests the hypotheses on a longitudinal sample of Spanish manufacturing companies that exported to different IDEXAs from 1990 until 2016. Findings The findings suggest a positive effect of IDEXA re-entry on new product and process introductions and a negative impact of a time-out period of four or more years for those export areas with higher innovation levels. Practical implications Re-internationalization offers exporters the opportunity to reuse the knowledge gained in prior exporting episodes to increase their chances of success. Hence, it is important that managers make sense of the potentially damaging exit experience, to avoid repeating the same mistakes and perform better the next time around. Originality/value This study investigates for the first time the effects of re-entry to specific export areas on exporters’ capacity to increase their innovation output. Hence, it contributes to the international business literature by examining the performance consequences of companies’ re-internationalization, a key and under-researched topic. Furthermore, most studies focus on full withdrawal from foreign markets and ignore the more common microscopic decisions concerning withdrawing from one or more export areas.