From domestic to exporter, what happens? Evidence for Spanish manufacturing firms

This paper analyses the process of internationalisation of firms, in the context of heterogeneous firms. The study aims to integrate the literature focused on the ex ante superiority of exporter firms, the self-selection hypothesis, with the literature dedicated to depict the impact of exporting on firm performance, the learning-by-exporting hypothesis. Using a survey of Spanish manufacturing firms, we analyse the six years previous to the entry into export markets and the first six years of exporting of new exporter firms, and we compare their performance with that of domestic firms. The results suggest that starting to export is correlated to a significant increase in size, both in terms of sales and employees. Moreover, we find a significant improvement in the worker’s labour conditions, measured as the percentage of employees with permanent contracts, following the entry into export markets. Finally, despite new exporter firms being more productive than domestic firms, the productivity differential does not follow a constant path. Instead, we find a U-shape trend in the productivity differential between domestic and new exporter firms.