Innovation Complementarities in FDI and Trade - Explaining Success and Failure, Organizational Learning and Form

Dr. Christian Thauer; Noa Swisa (MA) – PhD research student, DAAD Center for German Studies; Griffin Elbron (BA) MA student at DAAD Center for German Studies
The research group has focused on two particular goals this year. The first one concerns substance: the group conducted intensive research mapping of the institutional infrastructure between Germany and Israel, which allows firms and public policies to generate innovation complementarities. By innovation complementarities, the group understands different capabilities which concern the development of new traits (innovations: new ideas, technologies and products), manifested in institutional forms and environments of countries (Israel and Germany, respectively) that, in the context of each other (i.e., when interdependent), increase their value creating potential (i.e. generate increasing returns). Innovation complementarities may motivate international trade and foreign direct investment. For example, through investments and trade across institutional contexts – in our case, Israel and Germany –firms synchronize different innovation capabilities with each other and therewith increase their organizational value creating capacities. The questions we asked were accordingly: what institutional infrastructure exists between the two countries specifically dedicated to facilitating such complementarities? What institutional pathways could firms pursue if seeking to realize innovation complementarities? And what are the main obstacles on the way? Examples of such institutional infrastructure include the German-Israeli Chamber of Commerce activities to connect German firms to the Israeli startup market or similar programs from the Israeli Innovation Authority or Startup Nation Central. Addressing these questions, we managed to achieve a comprehensive mapping of this infrastructure through a.) secondary research; b.) interviews with German-Israeli, German, and Israeli public policy institutions; c.) firms that operate between Germany and Israel.
The second goal was to contact potential external funding agencies for a larger follow-up project and begin writing a funding proposal. We also progressed with respect to this specific goal. In January, PI Christian Thauer traveled to Guetersloh where he had a day-long meeting with the Israel desk of the Bertelsmann Foundation about future projects. 0n July 1st the group submitted a pre-project proposal to the Bertelsmann Foundation to work with the Foundation on a call for proposals for such a follow-up project.