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For God's sake. The impact of religious proximity on firms' exports

Author

Listed:
  • Alessia LO TURCO

    () (Università Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)

  • Daniela MAGGIONI

    () (Università di Catania, Department of Political Sciences)

Abstract

Using a rich firm level data set for Turkish manufacturing, we test whether the sharing of similar religious beliefs with potential contracting parties drives a firm.s first time entry in export markets. We exploit variation in the practice of Islam across Turkish provinces andwe find that firms located in provinces characterised by stronger religiousness are more likely to enter export destinations with a higher share ofMuslims among their population. This result is robust to the control for trade, cultural and migration ties, reverse causality and to several further sensitivity checks. Religious proximity, in particular, eases export entry for producers of "trust intensive" goods and mitigates the role of export experience in subsequent foreign market entries. All in all, our evidence hints at the important role of religious proximity in reducing export entry sunk costs by fostering higher trust among contracting parties.

Suggested Citation

  • Alessia LO TURCO & Daniela MAGGIONI, 2016. "For God's sake. The impact of religious proximity on firms' exports," Working Papers 418, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  • Handle: RePEc:anc:wpaper:418
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    References listed on IDEAS

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    Cited by:

    1. Fensore, Irene & Legge, Stefan & Schmid, Lukas, 2017. "Human Barriers to International Trade," Economics Working Paper Series 1712, University of St. Gallen, School of Economics and Political Science.

    More about this item

    Keywords

    Islam; export entry; uncertainty; cultural distance;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

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