Exports and Profitability – First Evidence for German Business Services Enterprises
AbstractWe use the unique recently released German business services statistics panel to conduct the first comprehensive empirical study on the relationship between exports and profitability for the business services sector. We document a negative profitability differential of services exporters compared to non-exporters that is statistically significant, though rather small, when observed firm characteristics and unobserved firm specific effects are controlled for. We find that export-starters in services are less profitable than non-starters, even two years before they begin to export, pointing to self-selection of less profitable firms into export markets. We use a recently developed continuous treatment approach to investigate the causal impact of exports on profits. The estimated dose-response function shows an s-shaped relationship between profitability in 2005 and firms’ export-sales ratio in 2004. Enterprises with a very small share of exports in total sales have a lower rate of profit than non-exporting firms. Then, with an increase in export intensity the rate of profit increases, too. However, even at the maximum the average profitability of the exporters is not, or only slightly, higher than the average rate of profit of the non-exporting firms. Given that Germany is one of the leading actors on the world market for services, the evidence provided here is interesting on its own. Furthermore, it can serve as a benchmark for future studies using comparable data for firms from services industries in other countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 129.
Length: 39 pages
Date of creation: May 2009
Date of revision:
Contact details of provider:
Web page: http://leuphana.de/institute/ivwl.html
Exports; profitability; business services enterprises; Germany;
Other versions of this item:
- Alexander Vogel & Joachim Wagner, 2010. "Exports and Profitability - First Evidence for German Business Services Enterprises," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(1), pages 7-30.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L80 - Industrial Organization - - Industry Studies: Services - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-17 (All new papers)
- NEP-EFF-2009-06-17 (Efficiency & Productivity)
- NEP-INT-2009-06-17 (International Trade)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gianmarco Ottaviano & Thierry Mayer, .
"The happy few: the internationalisation of European firms,"
Bruegel, number 12, 11.
- Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer, vol. 43(3), pages 135-148, May.
- Michela Bia & Alessandra Mattei, 2008. "A Stata package for the estimation of the dose–response function through adjustment for the generalized propensity score," Stata Journal, StataCorp LP, vol. 8(3), pages 354-373, September.
- International Study Group on Exports and Productivity (ISGEP), 2008.
"Understanding Cross-Country Differences in Exporter Premia: Comparable Evidence for 14 Countries,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 144(4), pages 596-635, December.
- Wagner, Joachim & Van Biesebroeck, Jo, 2008. "Understanding cross-country differences in export premia - Comparable evidence for 14 countries," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/199893, Katholieke Universiteit Leuven.
- Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2007.
"Do exporters really pay higher wages? First evidence from German linked employer-employee data,"
Journal of International Economics,
Elsevier, vol. 72(1), pages 52-74, May.
- Thorsten Schank & Claus Schnabel & Joachim Wagner, 2006. "Do exporters really pay higher wages? First evidence from German linked employer-employee data," Working Paper Series in Economics 28, University of Lüneburg, Institute of Economics.
- repec:ner:sciepo:info:hdl:2441/10147 is not listed on IDEAS
- Andrew B. Bernard & J. Bradford Jensen & Stephen Redding & Peter K. Schott, 2007.
"Firms in International Trade,"
CEP Discussion Papers
dp0795, Centre for Economic Performance, LSE.
- Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," NBER Working Papers 13054, National Bureau of Economic Research, Inc.
- Andrew Bernard & J. Bradford Jensen & Stephen Redding & Peter Schott, 2007. "Firms in International Trade," Working Papers 07-14, Center for Economic Studies, U.S. Census Bureau.
- Bernard, Andrew & Jensen, J Bradford & Redding, Stephen J & Schott, Peter, 2007. "Firms in International Trade," CEPR Discussion Papers 6277, C.E.P.R. Discussion Papers.
- Wagner, Joachim, 2002.
"Unobserved firm heterogeneity and the size-exports nexus : evidence from German panel data,"
HWWA Discussion Papers
194, Hamburg Institute of International Economics (HWWA).
- Joachim Wagner, 2003. "Unobserved firm heterogeneity and the size-exports nexus: Evidence from German panel data," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 139(1), pages 161-172, March.
- Alexander Eickelpasch, 2008. "Export Orientation of Service Companies on the Increase," Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 4(5), pages 28-35.
- Gianmarco Ottaviano & Thierry Mayer, 2007. "The happy few: the internationalisation of European firms New facts based on firm-level evidence," Sciences Po publications info:hdl:2441/10147, Sciences Po.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Wagner).
If references are entirely missing, you can add them using this form.