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The Asymmetries of a Small World: Entry Into and Withdrawal From International Markets by French Firms

  • Dirk Engel
  • Christoph M. Schmidt
  • Vivien Procher

    ()

This paper studies the internationalization behaviour of French companies, using more than 330.000 observations for three two-year intervals. We analyze the role of productivity, organisational and ownership structure, and of financial characteristics for the decision to enter into and exit from foreign markets. High levels of productivity are documented to be characteristic of companies deciding to engage in exporting or foreign direct investment (FDI). However, there does not seem to be a significant correlation between productivity and divestment decisions. Moreover, companies with corporate shareholders are more likely to intensify their international engagement and to retain their cross-border activities. Finally, with some exceptions high levels of short-term and long-term debt tend to make entry into a more intense international engagement more and its reduction less likely.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0192.

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Length: 31 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:rwi:repape:0192
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  1. Greenaway, David & Guariglia, Alessandra & Kneller, Richard, 2007. "Financial factors and exporting decisions," Journal of International Economics, Elsevier, vol. 73(2), pages 377-395, November.
  2. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
  3. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
  4. Joel Stiebale, 2011. "Do Financial Constraints Matter for Foreign Market Entry? A Firm‐level Examination," The World Economy, Wiley Blackwell, vol. 34(1), pages 123-153, 01.
  5. Joachim Wagner, 2007. "Entry, Exit and Productivity Empirical Results for German Manufacturing Industries," Jena Economic Research Papers 2007-064, Friedrich-Schiller-University Jena.
  6. Engel, Dirk & Procher, Vivien, 2009. "Export, FDI and Productivity – Evidence for French Firms," Ruhr Economic Papers 111, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  7. Geweke, John & Keane, Michael P & Runkle, David, 1994. "Alternative Computational Approaches to Inference in the Multinomial Probit Model," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 609-32, November.
  8. Haynes, Michelle & Thompson, Steve & Wright, Mike, 2000. "The determinants of corporate divestment in the UK," International Journal of Industrial Organization, Elsevier, vol. 18(8), pages 1201-1222, December.
  9. Joachim Wagner, 2008. "Export Entry, Export Exit and Productivity in German Manufacturing Industries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(2), pages 169-180.
  10. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
  11. Andrew B. Bernard & Joachim Wagner, 1998. "Export Entry and Exit by German Firms," NBER Working Papers 6538, National Bureau of Economic Research, Inc.
  12. Ilmakunnas, Pekka & Nurmi, Satu, 2007. "Dynamics of export market entry and exit," MPRA Paper 6060, University Library of Munich, Germany.
  13. Joachim Wagner, 2005. "Exports and Productivity: A Survey of the Evidence fro Firm Level Data," International Trade 0504005, EconWPA.
  14. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  15. Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "Pattenrs Of Firm Entry And Exit In U.S. Manufacturing Industries," Papers 1-88-2, Pennsylvania State - Department of Economics.
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  17. Phillips McDougall, Patricia & Shane, Scott & Oviatt, Benjamin M., 1994. "Explaining the formation of international new ventures: The limits of theories from international business research," Journal of Business Venturing, Elsevier, vol. 9(6), pages 469-487, November.
  18. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  19. Carlos Carreira & Paulino Teixeira, 2011. "The shadow of death: analysing the pre-exit productivity of Portuguese manufacturing firms," Small Business Economics, Springer, vol. 36(3), pages 337-351, April.
  20. repec:zbw:rwirep:0111 is not listed on IDEAS
  21. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
  22. Fariñas, Jose C. & Ruano, Sonia, 2005. "Firm productivity, heterogeneity, sunk costs and market selection," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 505-534, September.
  23. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
  24. Stephen Roper & James H. Love & Dolores Añon Hígon, 2006. "The Determinants Of Export Performance: Evidence For Manufacturing Plants In Ireland And Northern Ireland," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(5), pages 586-615, November.
  25. Gabriel Benito, 1997. "Divestment of foreign production operations," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1365-1378.
  26. John King, 2011. "Foreign Direct Investment and Pollution Havens," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 54(1), pages 39-47.
  27. Sourafel Girma & Richard Kneller & Mauro Pisu, 2005. "Exports versus FDI: An Empirical Test," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(2), pages 193-218, July.
  28. Andrew B Bernard & J. Bradford Jensen, 2007. "Firm Structure, Multinationals, and Manufacturing Plant Deaths," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 193-204, May.
  29. Jean J Boddewyn, 1979. "Foreign Divestment: Magnitude and Factors," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 10(1), pages 21-26, March.
  30. Gabriel R. G. Benito, 2005. "Divestment and international business strategy," Journal of Economic Geography, Oxford University Press, vol. 5(2), pages 235-251, April.
  31. Jean J Boddewyn, 1983. "Foreign and Domestic Divestment and Investment Decisions: Like or Unlike?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 14(3), pages 23-35, September.
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