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Exporting and firm performance: Market entry, investment and expansion

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  • Fabling, Richard
  • Sanderson, Lynda

Abstract

This paper examines input and productivity dynamics of manufacturing firms in the period leading to and following export market entry. We examine 3 possible explanations for the observed productivity gap between exporting and non-exporting firms: self-selection of high-performing firms into exporting; post-entry learning effects; and joint export-investment decisions. We consider both initial entry into exporting and subsequent expansion into new destination markets, showing that capital deepening and employment growth are associated with both types of entry. However, the timing of investment differs between the 2 entry events. The observed dynamics are consistent with a model of investment under uncertainty, in which first-time exporters delay investment to gain more information about the success of their export ventures, while experienced exporters pre-commit to capital deepening in advance of additional market expansion.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 89 (2013)
Issue (Month): 2 ()
Pages: 422-431

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Handle: RePEc:eee:inecon:v:89:y:2013:i:2:p:422-431

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Web page: http://www.elsevier.com/locate/inca/505552

Related research

Keywords: Exporting; Market entry; Productivity; Investment;

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References

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  1. Andrew Atkeson & Ariel Burstein, 2007. "Innovation, Firm Dynamics, and International Trade," Working Papers WP13_2007_10, Laboratory for Macroeconomic Analysis.
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  16. Jan De Loecker, 2004. "Do Exports Generate Higher Productivity? Evidence from Slovenia," LICOS Discussion Papers 15104, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  17. Richard Fabling, 2011. "Keeping it Together: Tracking Firms on New Zealand’s Longitudinal Business Database," Working Papers 11_01, Motu Economic and Public Policy Research.
  18. Richard Fabling & Arthur Grimes, 2009. "The "suite" smell of success: complementary personnel practices and firm performance," Reserve Bank of New Zealand Discussion Paper Series DP2009/13, Reserve Bank of New Zealand.
  19. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
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Citations

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Cited by:
  1. Sánchez, Patricio & Gallego, Elena & Rivero, Dolores & Lago-Peñas, Santiago, 2014. "El impacto de la internacionalización sobre las empresas: Evidencia empírica para el caso español
    [The impact of internationalization on firms: Empirical evidence for the Spanish case]
    ," MPRA Paper 54602, University Library of Munich, Germany.
  2. Fabling, Richard & Gemmell, Norman & Kneller, Richard & Sanderson, Lynda, 2013. "Estimating Firm-Level Effective Tax Rates and the User Cost of Capital in New Zealand," Working Paper Series 2854, Victoria University of Wellington, Chair in Public Finance.
  3. Richard Fabling & Norman Gemmell & Richard Kneller & Lynda Sanderson, 2013. "Estimating Firm-Level Effective Marginal Tax Rates and the User Cost of Capital in New Zealand," Working Papers 13_14, Motu Economic and Public Policy Research.
  4. Enzo Cassino & David Oxley, 2013. "How Does the Exchange Rate Affect the Real Economy? A Literature Survey," Treasury Working Paper Series 13/26, New Zealand Treasury.
  5. Michele Bernini & Tania Treibich, 2013. "Killing a Second Bird with One Stone? Promoting Firm Growth and Export through Tax Policy," GREDEG Working Papers 2013-30, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

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