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Determinants of Internationalization: Differences between Service and Manufacturing SMEs

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  • Anna Lejpras

Abstract

This paper empirically investigates the antecedents of internationalization of SMEs, focusing on differences between the manufacturing and service sectors. Specifically, employing a bivariate probit model based on survey data of approximately 3,900 East German firms, I analyze which firm-related and external factors affect a firm's decision to export and/or relocate production or other operations abroad. Generally, I find that SMEs from the manufacturing sector do more exporting than service firms. The results reveal that size, having main competitors located abroad, and introducing a novel product all are significantly positively related to the internationalization of SMEs regardless of industry affiliation. However, manufacturing firms in the high-tech sector are far more likely to be engaged in internationalization activity than are service firms, regardless of whether the latter are high-tech. Locational conditions and cooperation activities are generally less important for internationalization of service firms, too, compared to their manufacturing counterparts.

Suggested Citation

  • Anna Lejpras, 2009. "Determinants of Internationalization: Differences between Service and Manufacturing SMEs," Discussion Papers of DIW Berlin 886, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp886
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.97798.de/dp886.pdf
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    Citations

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    Cited by:

    1. Alexander Vogel & Joachim Wagner, 2012. "Innovation and Exports of German Business Services Enterprises: First evidence from a new type of firm data," Working Paper Series in Economics 246, University of Lüneburg, Institute of Economics.
    2. Iza Lejárraga & Harald Oberhofer, 2015. "Performance of small- and medium-sized enterprises in services trade: evidence from French firms," Small Business Economics, Springer, vol. 45(3), pages 673-702, October.
    3. Spyros Arvanitis & Heinz Hollenstein & Tobias Stucki, 2013. "Determinants of Internationalisation - Do they Differ among Sectors and Business Functions?," KOF Working papers 13-348, KOF Swiss Economic Institute, ETH Zurich.
    4. Arvanitis, Spyros & Hollenstein, Heinz & Stucki, Tobias, 2016. "Does the explanatory power of the OLI approach differ among sectors and business functions? Evidence from firm-level data," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-46.

    More about this item

    Keywords

    Internationalization; service; manufacturing; Bivariate Probit Model;

    JEL classification:

    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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