Exporting by Latvian companies: vitality, drivers of success, and challenges

This paper sheds light on Latvian exporters – how active they are, what challenges they face, what makes them succeed or fail. Our study draws on a survey of 503 medium-sized Latvian companies. We find that most medium-sized Latvian companies are exporters (either directly or indirectly) and for a typical exporting company, export turnover constitutes more than half of its total turnover. Exporting companies tend to be larger, younger and faster growing than their non-exporting counterparts. They pay higher average wages, consistent with the notion that they have higher labour productivity or utilise more skilled labour on average. For a typical company, export activity has been stable over the past five years, with zero growth in export turnover and an average increase of one additional export destination; however, there is wide dispersion in export growth and success among exporting companies. Successful exporters tend to be larger, with higher productivity growth and greater innovativeness, proactiveness and risk taking, i.e., stronger entrepreneurial orientation. The main obstacle preventing non-exporters from commencing exporting is lack of international competitiveness. This is also the main reason why companies discontinue exporting, and should be the focus of policy aimed at promoting exporting.