IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v33y2010i3p399-423.html
   My bibliography  Save this article

Exports and Profitability: First Evidence for German Manufacturing Firms

Author

Listed:
  • Helmut Fryges
  • Joachim Wagner

Abstract

Abstract Using unique recently released nationally representative high-quality longitudinal enterprise-level data for Germany, this paper presents the first comprehensive evidence on the relationship between exports and profitability. It documents that the positive profitability differential of exporters compared to non-exporters is statistically significant, though rather small, when observed firm characteristics and unobserved firm-specific effects are controlled for. In contrast to nearly all empirical studies on the relationship between productivity and exports we do not find any evidence for self-selection of more profitable firms into export markets. Due to the sampling frame of the data used we cannot test the hypothesis that firms which start exporting perform better in the years after the start than their counterparts which do not start. Instead, we use a newly developed continuous treatment approach and show that exporting improves the profitability almost over the whole range of the export-sales ratio. Only firms that generate 90 per cent and more of their total sales abroad do not benefit from exporting in terms of an increased rate of profit. This means that the usually observed higher productivity of exporters is not completely absorbed by the extra costs of exporting or by higher wages paid by internationally active firms. Copyright 2010 Blackwell Publishing Ltd.

Suggested Citation

  • Helmut Fryges & Joachim Wagner, 2010. "Exports and Profitability: First Evidence for German Manufacturing Firms," The World Economy, Wiley Blackwell, vol. 33(3), pages 399-423, March.
  • Handle: RePEc:bla:worlde:v:33:y:2010:i:3:p:399-423
    as

    Download full text from publisher

    File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9701.2010.01261.x
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    2. repec:spo:wpecon:info:hdl:2441/10147 is not listed on IDEAS
    3. Helmut Fryges & Joachim Wagner, 2008. "Exports and Productivity Growth: First Evidence from a Continuous Treatment Approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(4), pages 695-722, December.
    4. Jean-François Hennart, 2007. "The theoretical rationale for a multinationality-performance relationship," Management International Review, Springer, vol. 47(3), pages 423-452, June.
    5. Joachim Wagner, 2007. "Exports and Productivity: A Survey of the Evidence from Firm-level Data," The World Economy, Wiley Blackwell, vol. 30(1), pages 60-82, January.
    6. repec:spr:manint:v:47:y:2007:i:3:d:10.1007_s11575-007-0018-0 is not listed on IDEAS
    7. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009 Elsevier.
    8. repec:wsi:wschap:9789813109698_0005 is not listed on IDEAS
    9. Joachim Wagner, 2003. "Unobserved firm heterogeneity and the size-exports nexus: Evidence from German panel data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(1), pages 161-172, March.
    10. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Do Exporters Really Pay Higher Wages? First Evidence from German Linked Employer–Employee Data," World Scientific Book Chapters,in: Microeconometrics of International Trade, chapter 5, pages 177-213 World Scientific Publishing Co. Pte. Ltd..
    11. Thierry Mayer & Gianmarco Ottaviano, 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.
    12. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, pages 394-425.
    13. Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(3), pages 135-148, May.
    14. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    15. repec:spr:weltar:v:144:y:2008:i:4:p:596-635 is not listed on IDEAS
    16. repec:spr:manint:v:47:y:2007:i:3:d:10.1007_s11575-007-0019-z is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olof Ejermo & Karin Bergman, 2014. "Services vs. Manufacturing – How Does Foreign and Domestic Sales Impact on Their R&D?," Journal of Industry, Competition and Trade, Springer, pages 367-391.
    2. Bergman, Karin & Ejermo, Olof, 2011. "Swedish Business R&D and its Export Dependence," Working Papers 2011:26, Lund University, Department of Economics.
    3. Magnus Lodefalk, 2014. "The role of services for manufacturing firm exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 59-82.
    4. Sarbu, Miruna, 2013. "Does social software increase labour productivity?," ZEW Discussion Papers 13-041, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Ehrl, Philipp, 2013. "Agglomeration economies with consistent productivity estimates," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 751-763.
    6. Dhyne, Emmanuel & Berthou, Antoine & Soares, Ana Cristina & Bugamelli, Matteo & Cazacu, Ana-Maria & Lalinsky, Tibor & Meriküll, Jaanika & Harasztosi, Péter & Demian, Calin-Vlad & Oropallo, Filippo, 2015. "Assessing European firms' exports and productivity distributions: the CompNet trade module," Working Paper Series 1788, European Central Bank.
    7. Joachim Wagner, 2012. "Exports, Imports and Profitability: First Evidence for Manufacturing Enterprises," Open Economies Review, Springer, vol. 23(5), pages 747-765, November.
    8. Petrick Sebastian & Rehdanz Katrin & Wagner Ulrich J., 2011. "Energy Use Patterns in German Industry: Evidence from Plant-level Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(3), pages 379-414, June.
    9. Joachim Wagner, 2011. "Productivity and International Firm Activities: What do we know?," Working Paper Series in Economics 194, University of Lüneburg, Institute of Economics.
    10. Joachim Wagner, 2012. "International trade and firm performance: a survey of empirical studies since 2006," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(2), pages 235-267, June.
    11. Alexander Vogel, 2009. "Exporter Performance in the German Business Services Sector: First Evidence from the Services Statistics Panel," Working Paper Series in Economics 111, University of Lüneburg, Institute of Economics.
    12. Joachim Wagner, 2015. "New Methods for the Analysis of Links between International Firm Activities and Firm Performance: A Practitioner's Guide," The World Economy, Wiley Blackwell, vol. 38(4), pages 704-715, April.
    13. Cenk Gokce ADAS, 2016. "Exporting Firms, Productivity And Profitabiliy: A Survey Of The Evidence From Manufacturing Industries," Proceedings of International Academic Conferences 3606362, International Institute of Social and Economic Sciences.
    14. Diana Alexandra Gonçalves Costa & Ana Teresa Cunha de Pinho Tavares Lehmann, 2015. "Performance Differences between Exporters and Non-Exporters: the Case of Portugal," FEP Working Papers 569, Universidade do Porto, Faculdade de Economia do Porto.
    15. Temouri, Yama & Vogel, Alexander & Wagner, Joachim, 2013. "Self-selection into export markets by business services firms – Evidence from France, Germany and the United Kingdom," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 146-158.
    16. Marco Grazzi, 2009. "Trade and Profitability: Is there an export premium? Evidence from Italian manufacturing firms," LEM Papers Series 2009/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    17. Joachim Wagner, 2015. "25 Jahre Nutzung vertraulicher Firmenpaneldaten der amtlichen Statistik für wirtschaftswissenschaftliche Forschung: Produkte, Projekte, Probleme, Perspektiven," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 9(2), pages 83-106, November.
    18. Joachim Wagner, 2015. "Kombinierte Firmenpaneldaten – Datenangebot und Analysepotenziale," Working Paper Series in Economics 340, University of Lüneburg, Institute of Economics.
    19. Azize Esmeray & Murat Esmeray, 2016. "The Relationship Between Profit and Export Performance Revisited: Evidence from Turkish Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1035-1037.
    20. Fulvio Castellacci, 2014. "Service Firms Heterogeneity, International Collaborations and Export Participation," Journal of Industry, Competition and Trade, Springer, vol. 14(2), pages 259-285, June.
    21. Heather D Gibson & Georgia Pavlou, 2017. "Exporting and performance: evidence from Greek firms," Working Papers 228, Bank of Greece.
    22. repec:krk:eberjl:v:2:y:2014:i:4:p:9-29 is not listed on IDEAS
    23. Stefan Goldbach & Volker Nitsch, 2014. "Extra Credit: Bank Finance and Firm Export Status in Germany," The World Economy, Wiley Blackwell, vol. 37(7), pages 883-891, July.
    24. Vito Amendolagine & Rosa Capolupo & Nadia Petragallo, 2011. "Export Status and Productivity Performance: Evidence from Matched Italian Firms," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 66(2), pages 151-180, June.
    25. Adriana Peluffo, 2016. "The role of investments in export growth," Small Business Economics, Springer, vol. 47(1), pages 115-137, June.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:33:y:2010:i:3:p:399-423. See general 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: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.