Journal of Industry, Competition and Trade

, Volume 14, Issue 3, pp 367–391 | Cite as

Services vs. Manufacturing – How Does Foreign and Domestic Sales Impact on Their R&D?



While the distinction between manufacturing and services becomes increasingly blurred to some observers, we find, using a panel of Swedish firms, clear evidence that foreign sales (exports) are more important than domestic sales for stimulating R&D. This is particularly clear for manufacturing and this importance of foreign sales has increased over time, simultaneous to an opening up of the Swedish economy. Even though service industries have seen an increase in both R&D and trade over time, it is thus mainly manufacturing that has benefited from increased possibilities for absorptive capacity. This result suggests a clear dichotomy between manufacturing and services in terms of how they react to trade and how they turn towards the foreign market vs. the domestic market to find stimuli for innovation.


Research and development Foreign and domestic sales Services Manufacturing 

Jel codes

D22 F14 F43 L60 L80 O14 O31 O33 O52 



We thank Martin Andersson and Johan Blomquist for useful comments on earlier drafts and two anonymous reviewers whose comments helped us improve the manuscript. Davide Castellani provided useful guidance at the later stages. Olof Ejermo acknowledges financing from the Swedish Research Council (Linnaeus Grant No. 349200680) and the Swedish Governmental Agency for Innovation Systems (Grant agreements 2008-00935 and 2010-07370).


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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Centre for Innovation, Research, and Competence in the Learning Economy (CIRCLE)Lund UniversityLundSweden
  2. 2.AgriFood Economics CentreLundSweden

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