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Entrepreneurship and aggregate merchandise trade growth in New Zealand

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  • Richard Fabling
  • Lynda Sanderson

Abstract

We present a descriptive analysis of firm-level merchandise trade, focussing on the role of entrepreneurial exporting behaviour. We document two aspects of the dynamics of trade – the contribution of novel export activity to aggregate trade growth and, conversely, the substantial exit rates of new trade relationships. The unique contribution of this paper lies in the detailed and comprehensive data we have available on market and product choices. Specifically, we make use of shipment-level goods trade data, linked to information for the universe of economically active New Zealand manufacturers,to examine trade at the firm-level and at the product-country-firm nexus. Our growth decomposition and survival analysis suggest several themes: (a) novel market entry is a significant contributor to aggregate export growth; (b) the study of international entrepreneurial behaviour should encompass not just de novo entrants, but the broad range of trade innovations initiated by incumbent exporters; (c) much expansion in trade appears to be incremental in nature; (d) despite this, such innovations appear to be inherently risky; and (e) experience and scale appear to be key factors in overcoming these risks (or at least proxies for such factors).
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  • Richard Fabling & Lynda Sanderson, 2010. "Entrepreneurship and aggregate merchandise trade growth in New Zealand," Journal of International Entrepreneurship, Springer, vol. 8(2), pages 182-199, June.
    • Handle: RePEc:kap:jinten:v:8:y:2010:i:2:p:182-199
    DOI: 10.1007/s10843-010-0063-9
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    1. John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers 2002-06, Center for Economic Studies, U.S. Census Bureau.
    2. Fabling, Richard, 2007. "Just How Innovative are New Zealand Firms? Quantifying & Relating Organisational and Marketing Innovation to Traditional Science & Technology Indicators," Occasional Papers 07/4, Ministry of Economic Development, New Zealand.
    3. Leonidas C Leonidou & Constatine S Katsikeas, 1996. "The Export Development Process: An Integrative Review of Empirical Models," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(3), pages 517-551, September.
    4. Besedes, Tibor & Prusa, Thomas J., 2006. "Product differentiation and duration of US import trade," Journal of International Economics, Elsevier, vol. 70(2), pages 339-358, December.
    5. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(2), pages 430-447, May.
    6. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, May.
    7. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning by Exporting Important? Micro-Dynamic Evidence from Colombia, Mexico, and Morocco," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 903-947.
    8. Richard Fabling & Arthur Grimes & Lynda Sanderson, 2012. "Whatever next? Export market choices of New Zealand firms," Papers in Regional Science, Wiley Blackwell, vol. 91(1), pages 137-159, March.
    9. Richard Fabling & Lynda Sanderson, 2010. "Entrepreneurship and aggregate merchandise trade growth in New Zealand," Journal of International Entrepreneurship, Springer, vol. 8(2), pages 182-199, June.
    10. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages 134-161, February.
    11. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-564, September.
    12. Geoff Simmons, 2002. "Growing Pains: New Zealand Qualitative Evidence on Hurdles to Exporting Growth," Treasury Working Paper Series 02/10, New Zealand Treasury.
    13. Vivienne Shaw & Jenny Darroch, 2004. "Barriers to Internationalisation: A Study of Entrepreneurial New Ventures in New Zealand," Journal of International Entrepreneurship, Springer, vol. 2(4), pages 327-343, December.
    14. Fabling, Richard & Sanderson, Lynda, 2008. "Firm Level Patterns in Merchandise Trade," Occasional Papers 08/3, Ministry of Economic Development, New Zealand.
    15. Richard Fabling & Arthur Grimes, 2008. "Over the hedge? Exporters' optimal and selective hedging choices," Reserve Bank of New Zealand Discussion Paper Series DP2008/14, Reserve Bank of New Zealand.
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    Cited by:

    1. Richard Fabling & Arthur Grimes & Lynda Sanderson, 2012. "Whatever next? Export market choices of New Zealand firms," Papers in Regional Science, Wiley Blackwell, vol. 91(1), pages 137-159, March.
    2. Tolga Cebeci & Ana M. Fernandes, 2015. "Microdynamics of Turkey's Export Boom in the 2000s," The World Economy, Wiley Blackwell, vol. 38(5), pages 825-855, May.
    3. Richard Fabling & Lynda Sanderson, 2015. "Export Performance, Invoice Currency and Heterogeneous Exchange Rate Pass-through," The World Economy, Wiley Blackwell, vol. 38(2), pages 315-339, February.
    4. Richard Fabling & Lynda Sanderson, 2015. "Exchange rate fluctuations and the margins of exports," Working Papers 15_05, Motu Economic and Public Policy Research.
    5. Richard Fabling & Lynda Sanderson, 2016. "A Rough Guide to New Zealand's Longitudinal Business Database (2nd edition)," Working Papers 16_03, Motu Economic and Public Policy Research.
    6. Richard Fabling & Arthur Grimes, 2015. "Over the Hedge: Do Exporters Practice Selective Hedging?," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 35(4), pages 321-338, April.
    7. Joachim Wagner, 2016. "A survey of empirical studies using transaction level data on exports and imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 215-225, February.
    8. Shahid Yusuf, 2014. "Middle East Transitions: A Long, Hard Road," IMF Working Papers 2014/135, International Monetary Fund.
    9. Richard Fabling & Lynda Sanderson, 2010. "Entrepreneurship and aggregate merchandise trade growth in New Zealand," Journal of International Entrepreneurship, Springer, vol. 8(2), pages 182-199, June.
    10. Fabling, Richard & Sanderson, Lynda, 2013. "Exporting and firm performance: Market entry, investment and expansion," Journal of International Economics, Elsevier, vol. 89(2), pages 422-431.
    11. Lynda Sanderson, 2016. "Barriers to Generating International Income: Evidence from the Business Operations Survey," Treasury Working Paper Series 16/04, New Zealand Treasury.
    12. Jiayue Liu & Ying Hu & Jing Xie & Bo Li, 2022. "Does cultural diversity contribute to the sustainable development of trade? Empirical evidence from 288 Chinese cities," Growth and Change, Wiley Blackwell, vol. 53(1), pages 432-451, March.

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    More about this item

    Keywords

    Trade growth; Sunk costs; Innovation;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F10 - International Economics - - Trade - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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