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A Note on the Link between Firm Size and Exports

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  • Hernandez, Pedro J.
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    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.

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    File URL: https://mpra.ub.uni-muenchen.de/51576/1/MPRA_paper_51576.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 51576.

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    Date of creation: 19 Nov 2013
    Handle: RePEc:pra:mprapa:51576
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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.
    2. Stephen J. Redding, 2011. "Theories of Heterogeneous Firms and Trade," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 77-105, September.
    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.
    4. Carlo Altomonte & Tommaso Aquilante, 2012. "The EU-EFIGE/Bruegel-Unicredit dataset," Working Papers 753, Bruegel.
    5. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2012. "The Empirics of Firm Heterogeneity and International Trade," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 283-313, July.
    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.
    10. 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.
    11. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    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.
    13. David Powell & Joachim Wagner, 2011. "The Exporter Productivity Premium along the Productivity Distribution: Evidence from Unconditional Quantile Regression with Firm Fixed Effects," Working Papers 837, RAND Corporation.
    14. Pla-Barber, José & Alegre, Joaquín, 2007. "Analysing the link between export intensity, innovation and firm size in a science-based industry," International Business Review, Elsevier, vol. 16(3), pages 275-293, June.
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