This paper provides evidence on the links between productivity and internationalisation choices for a large sample of both large and small-medium sized Italian firms. By using detailed qualitative and quantitative information we first identify those firms engaged in international activities through exports and/or horizontal FDIs. Following the empirical literature on firm heterogeneity we estimate different measures of Total Factor Productivity and we provide empirical support to the theoretical predictions that there is a productivity ranking among domestic firms, exporters, and FDI performers. By estimating a multinomial logit model, we also control for the effect of variables other than TFP such as size, innovative activity, age, ICT adoption, labour composition, and group membership. As these variables only partially capture the effect of productivity on the probability to engage in foreign markets, we find that the ranking is robust with respect to the inclusion of these additional firm-level characteristics.
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Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number
236.
Find related papers by JEL classification: D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity F14 - International Economics - - Trade - - - Country and Industry Studies of Trade F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models
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