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A Note on the Link between Firm Size and Exports

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  • Hernandez, Pedro J.

Abstract

This paper re-examines the link between firm size and exports in order to study the proposal that consists of increasing the firm size to raise exports as a way out of the current economic crisis. The elasticity of export propensity (percentage of exported sales) with respect to firm size depends on several firm characteristics. The new theories of international trade emphasize the firm heterogeneity as the theoretical basis of this behaviour. In the context of such heterogeneity, this paper uses the quantile regression methodology to analyze the effect of firm size on export propensity of the firms, confirming the existence of a positive relationship that becomes less important as export propensity increases. The traditional estimate of this elasticity on the average of the export propensities distribution underestimates the effect in the bottom of the distribution and overestimates the effect on most of it.

Suggested Citation

  • Hernandez, Pedro J., 2013. "A Note on the Link between Firm Size and Exports," MPRA Paper 51576, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:51576
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    References listed on IDEAS

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    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.
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    3. Joachim Wagner, 2011. "From Estimation Results to Stylized Facts Twelve Recommendations for Empirical Research in International Activities of Heterogeneous Firms," De Economist, Springer, vol. 159(4), pages 389-412, December.
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    6. Vermeulen, Philip, 2004. "Factor content, size, and export propensity at the firm level," Economics Letters, Elsevier, vol. 82(2), pages 249-252, February.
    7. Ernst Verwaal & Bas Donkers, 2002. "Firm Size and Export Intensity: Solving an Empirical Puzzle," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(3), pages 603-613, September.
    8. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    9. David Powell & Joachim Wagner, 2014. "The exporter productivity premium along the productivity distribution: evidence from quantile regression with nonadditive firm fixed effects," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(4), pages 763-785, November.
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    12. Majocchi, Antonio & Bacchiocchi, Emanuele & Mayrhofer, Ulrike, 2005. "Firm size, business experience and export intensity in SMEs: A longitudinal approach to complex relationships," International Business Review, Elsevier, vol. 14(6), pages 719-738, December.
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    1. repec:taf:jitecd:v:26:y:2017:i:5:p:585-611 is not listed on IDEAS

    More about this item

    Keywords

    Exports; Firm Size;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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