International cooperation on innovation: Firm-level evidence from two European countries

In this paper we investigate the factors that lead firms to cooperate with partners from foreign countries on innovation activities. Portuguese and German data from the harmonised Community Innovation Survey III (CIS) allow us to compare innovation cooperation behaviour of private firms in the two countries. We first look at differences between the drivers of foreign and domestic cooperation and find, that absorptive capacities influence both types of cooperation. Supporting absorptive capacity building can therefore be a policy tool to foster international and domestic R&D cooperation at the same time. We also show that the characteristics of firms cooperating with foreigners in both countries are quite similar. International activities other than cooperation, firm size and the importance of protection methods for knowledge have a positive influence on the decision to cooperate with foreign partners in both countries. Some differences remain, however In Germany, exporters are more likely to cooperate with foreign partners than non-exporters, whereas in Portugal this is not the case.