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Exit in globalising industries: the role of international (out)sourcing

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Author Info
Coucke, K.
Sleuwaegen, L. () (Vlerick Leuven Gent Management School)

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Abstract

This paper studies the impact of globalisation on the exit behaviour of domestic and foreign firms in the manufacturing industries of Belgium, one of the most open economies in the world. The strongest effects are found to come from rising import growth and rising multinational firms penetration of the industry, which systematically increase the probability of exit of (inefficient) domestic firms. Product differentiation and international (out)sourcing moderate this impact and lower the risk of exit. Controlling for productivity differences across firms, exporting on itself does not lower the probability of exit. Subsidiaries of multinational firms are found to be subject to similar disciplinary forces from import competition as domestic firms but do not show exit to respond to the same passive learning process.

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Publisher Info
Paper provided by Vlerick Leuven Gent Management School in its series Vlerick Leuven Gent Management School Working Paper Series with number 2006-14.

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Length: 33 pages
Date of creation: 01 Jun 2006
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Handle: RePEc:vlg:vlgwps:2006-14

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Related research
Keywords: Exit; Sourcing; International Competition;

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Cited by:
(explanations, 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.)

  1. Marialuz Moreno Badia & Veerle Slootmaekers & Ilke Van Beveren, 2008. "Globalization Drives Strategic Product Switching," IMF Working Papers 08/246, International Monetary Fund. [Downloadable!]
  2. Colantone, Italo & Sleuwaegen, Leo, 2008. "Entry and exit of firms in a global economy: a cross-country and industry analysis," Vlerick Leuven Gent Management School Working Paper Series 2007-36, Vlerick Leuven Gent Management School. [Downloadable!]
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