IDEAS home Printed from https://ideas.repec.org/p/ems/eureri/78.html
   My bibliography  Save this paper

Customs-Related Transaction Costs, Firm Size and International Trade Intensity

Author

Listed:
  • Verwaal, E.
  • Donkers, A.C.D.

Abstract

The costs of paperwork and delays needed to clear international customs are generally perceived as a time-consuming impediment to international trade. However, few studies have empirically examined the determinants and the impact of this type of government-imposed transaction costs. This paper analyses the role of firm size as a determinant of customs-related transaction costs, as well as the effect of firm size on the relationship between these costs and the international trade intensity of firms. We submit that economies of scale should be related to the size of the activities the firm is specialised in, and not directly linked to the size of a firm per se. The results of this study indicate that customs-related transaction costs repress international trade activities of firms, even at low levels of these costs. The paper identifies transaction-related economies of scale, simplified customs procedures and advanced information and communication technology as main determinants of customs-related transaction costs. When these factors are taken into account, firm size has no effect on customs-related transaction costs. Policy implications are considered for firm strategy and public policy.

Suggested Citation

  • Verwaal, E. & Donkers, A.C.D., 2001. "Customs-Related Transaction Costs, Firm Size and International Trade Intensity," ERIM Report Series Research in Management ERS-2001-13-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:78
    as

    Download full text from publisher

    File URL: https://repub.eur.nl/pub/78/erimrs20010226105731.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Cedric Sandford, 1981. "Book Review: Costs and Benefits of VAT," Fiscal Studies, Institute for Fiscal Studies, vol. 2(2), pages 61-62, July.
    2. Lenn Gomes & Kannan Ramaswamy, 1999. "An Empirical Examination of the Form of the Relationship Between Multinationality and Performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 173-187, March.
    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. Jonathan L Calof, 1994. "The Relationship Between Firm Size and Export Behavior Revisited," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(2), pages 367-387, June.
    5. Marsha Blumenthal & Joel Slemrod, 1995. "The compliance cost of taxing foreign-source income: Its magnitude, determinants, and policy implications," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(1), pages 37-53, February.
    6. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412, National Bureau of Economic Research, Inc.
    7. Andrea Bonaccorsi, 1992. "On the Relationship Between Firm Size and Export Intensity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(4), pages 605-635, December.
    8. Hudson, John & Godwin, Michael, 2000. "The compliance costs of collecting direct tax in the UK:: An analysis of PAYE and National Insurance," Journal of Public Economics, Elsevier, vol. 77(1), pages 29-44, July.
    9. repec:cdl:ciders:qt0sx02651 is not listed on IDEAS
    10. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412, National Bureau of Economic Research, Inc.
    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. Roberto Miranda, 2012. "Central American Economic Integration - The Impact of a Customs Union with Guatemala on El Salvador’s Economy," Competence Centre on Money, Trade, Finance and Development 1208, Hochschule fuer Technik und Wirtschaft, Berlin.
    2. Ueki, Yasushi, 2014. "Trade obstacles, inventory level of inputs, and internationalization of enterprise activities : a comparison between Southeast Asia and Latin America," IDE Discussion Papers 474, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    3. Africa Ariño & Roberto Ragozzino & Jeffrey J. Reuer, 2008. "Alliance Dynamics for Entrepreneurial Firms," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 147-168, January.
    4. Xuqian Hu & Canfei He, 2020. "Nontariff measures, trade deflection, and market expansion of exporters in China," Growth and Change, Wiley Blackwell, vol. 51(3), pages 932-953, September.
    5. Drinkwater, Stephen & Robinson, Catherine, 2023. "The impact of customs and trade regulations on the operations of African firms," Journal of Business Research, Elsevier, vol. 165(C).
    6. Giovanna Magnani & Antonella Zucchella & Dinorà Eliete Floriani, 2015. "Relativity and asymmetry in distance. The role of strategic distance in the internationalization decisions of Brazilian and Italian firms," DEM Working Papers Series 111, University of Pavia, Department of Economics and Management.
    7. Herman Belgraver & Ernst Verwaal, 2018. "Organizational capital, production factor resources, and relative firm size in strategic equity alliances," Small Business Economics, Springer, vol. 50(4), pages 825-849, April.
    8. Mario Holzner & Florin Peci, 2011. "The Impact of Customs Procedures on Business Performance: Evidence from Kosovo," wiiw Working Papers 76, The Vienna Institute for International Economic Studies, wiiw.
    9. Vasily Astrov & Mario Holzner & Florin Peci & Sandor Richter, 2012. "Monthly Report No. 1/2012," wiiw Monthly Reports 2012-01, The Vienna Institute for International Economic Studies, wiiw.
    10. Magnani, Giovanna & Zucchella, Antonella & Floriani, Dinorá Eliete, 2018. "The logic behind foreign market selection: Objective distance dimensions vs. strategic objectives and psychic distance," International Business Review, Elsevier, vol. 27(1), pages 1-20.
    11. Yang, Jie, 2014. "Supply chain agility: Securing performance for Chinese manufacturers," International Journal of Production Economics, Elsevier, vol. 150(C), pages 104-113.
    12. De Beule, Filip & Klein, Martin & Verwaal, Ernst, 2020. "Institutional quality and inclusive strategies at the base of the pyramid," Journal of World Business, Elsevier, vol. 55(5).
    13. Halit Yanikkaya & Zeynep Aktas Koral, 2017. "Assessing the Determinants of Customs-Related Transaction Costs in Turkey," Working Papers 2017-02, Gebze Technical University, Department of Economics.
    14. Hege Medin, 2021. "Customs brokers as intermediaries in international trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(2), pages 295-322, May.
    15. DaSilva Glasgow, Dianna & Hosein, Roger, 2018. "Non-tariff Barriers to Trade: What Does the Experience of Guyanese Exporters of Food and Agriculture Products Reveal?," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 19(01), June.
    16. Peter Walkenhorst & Tadashi Yasui, 2004. "Quantitative Assessment of the Benefits of Trade Facilitation," International Trade 0401008, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Coviello, Nicole E. & Jones, Marian V., 2004. "Methodological issues in international entrepreneurship research," Journal of Business Venturing, Elsevier, vol. 19(4), pages 485-508, July.
    2. Westhead, Paul & Wright, Mike & Ucbasaran, Deniz, 2002. "International market selection strategies selected by 'micro' and 'small' firms," Omega, Elsevier, vol. 30(1), pages 51-68, February.
    3. Fernández, Zulima & J.Nieto, María, 2002. "International involvement of smes: the impact of ownership," DEE - Working Papers. Business Economics. WB wb025821, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    4. Ana M. Moreno-Menéndez & José C. Casillas & María Agustí, 2024. "Internationalization as Patterns of Change Over Time: A Configurational Analysis," Global Business Review, International Management Institute, vol. 25(1), pages 99-116, February.
    5. repec:ehu:cuader:7865 is not listed on IDEAS
    6. Frances Fabian & Henry Molina & Giuseppe Labianca, 2009. "Understanding Decisions to Internationalize by Small and Medium-sized Firms Located in an Emerging Market," Management International Review, Springer, vol. 49(5), pages 537-563, October.
    7. Lado, Nora & Martínez-Ros, Ester & Valenzuela, Ana, 2001. "Explaining export regional involvement through marketing strategy : the case of Spanish companies exporting to Latin America," DEE - Working Papers. Business Economics. WB wb012609, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    8. Tiessen, James H. & Wright, Richard W. & Turner, Ian, 2001. "A model of e-commerce use by internationalizing SMEs," Journal of International Management, Elsevier, vol. 7(3), pages 211-233.
    9. Sijbren Cnossen & Erns Verwaal, 2001. "Europe`s new border taxes," CESifo Working Paper Series 434, CESifo.
    10. Sandberg, Susanne, 2014. "Experiential knowledge antecedents of the SME network node configuration in emerging market business networks," International Business Review, Elsevier, vol. 23(1), pages 20-29.
    11. Verwaal, E. & Donkers, A.C.D., 2001. "Firm Size and Export Intensity," ERIM Report Series Research in Management ERS-2001-12-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    12. Levent, Korap, 2007. "Modeling purchasing power parity using co-integration: evidence from Turkey," MPRA Paper 19584, University Library of Munich, Germany.
    13. Coudert, Virginie & Mignon, Valérie, 2013. "The “forward premium puzzle” and the sovereign default risk," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 491-511.
    14. Karen K. Lewis, 2011. "Global Asset Pricing," Annual Review of Financial Economics, Annual Reviews, vol. 3(1), pages 435-466, December.
    15. Witold Nowiński & Wanda Nowara, 2011. "Stopień i uwarunkowania internacjonalizacji polskich małych i średnich przedsiębiorstw," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 29-45.
    16. YV Reddy, 2012. "Summary of the discussion," BIS Papers chapters, in: Bank for International Settlements (ed.), Financial sector regulation for growth, equity and stability, volume 62, pages 39-40, Bank for International Settlements.
    17. Salvador Gil-Pareja & Simón Sosvilla-Rivero, 2004. "Export Market Integration in the European Union," Journal of Applied Economics, Taylor & Francis Journals, vol. 7(2), pages 271-301, November.
    18. Herwartz, H. & Xu, F., 2010. "A functional coefficient model view of the Feldstein-Horioka puzzle," Journal of International Money and Finance, Elsevier, vol. 29(1), pages 37-54, February.
    19. Francesca Iorio & Stefano Fachin, 2014. "Savings and investments in the OECD: a panel cointegration study with a new bootstrap test," Empirical Economics, Springer, vol. 46(4), pages 1271-1300, June.
    20. Dal Bianco, Marcos & Camacho, Maximo & Perez Quiros, Gabriel, 2012. "Short-run forecasting of the euro-dollar exchange rate with economic fundamentals," Journal of International Money and Finance, Elsevier, vol. 31(2), pages 377-396.
    21. Manuchehr Irandoust, 2019. "Saving and investment causality: implications for financial integration in transition countries of Eastern Europe," International Economics and Economic Policy, Springer, vol. 16(2), pages 397-416, April.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    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:ems:eureri:78. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: RePub The email address of this maintainer does not seem to be valid anymore. Please ask RePub to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/erimanl.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.