Managing Internationalization through Innovation: A Viewpoint from a Developing Country

The aim of this paper is to study the aspects that influence export activity of companies in developing countries, with a particular focus on their innovative behavior. Most studies have analyzed this issue in advanced countries and only recently, several studies have started to analyze this aspect in developing countries. Our main conclusion -in the case of Mexicos that innovative behavior is directly associated with exporting behavior. All econometric studies that we analyzed define this relation as linear; however, our results show that this conclusion needs reviewing. We show -with empirical data for the case of Mexico- that this linear model could be erroneous. Using a logistic regression model to examine the effect of innovative behavior on export probability, our data reflect a non-linear relationship in the form of an inverted "U". The least innovative companies have a lower export probability, and are followed by the most innovative firms; however, companies with a "medium" level of innovative behavior are the most competitive in the world market. Taken from the company standpoint, we hope to shed light on why innovative behavior should be an important factor when building an internationalization strategy