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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. Joachim Wagner, 2007. "Export Entry, Export Exit, and Productivity in German Manufacturing Industries," Jena Economic Research Papers 2007-062, Friedrich-Schiller-University Jena.
  2. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
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  6. Ilmakunnas, Pekka & Nurmi, Satu, 2007. "Dynamics of export market entry and exit," MPRA Paper 6060, University Library of Munich, Germany.
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  8. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  9. 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.
  10. Jean J Boddewyn, 1983. "Foreign and Domestic Divestment and Investment Decisions: Like or Unlike?," Journal of International Business Studies, Palgrave Macmillan, vol. 14(3), pages 23-35, September.
  11. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
  12. Gabriel R. G. Benito, 2005. "Divestment and international business strategy," Journal of Economic Geography, Oxford University Press, vol. 5(2), pages 235-251, April.
  13. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
  14. Wagner, Joachim, 2007. "Entry, Exit and Productivity: Empirical Results for German Manufacturing Industries," IZA Discussion Papers 2667, Institute for the Study of Labor (IZA).
  15. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter.
  16. J. Bradford Jensen & Andrew Bernard, 2005. "Firm Structure, Multinationals, and Manufacturing Plant Deaths," Working Papers 05-18, Center for Economic Studies, U.S. Census Bureau.
  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. Engel, Dirk & Procher, Vivien, 2009. "Export, FDI and Productivity – Evidence for French Firms," Ruhr Economic Papers 111, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  19. 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.
  20. Andrew B. Bernard & Joachim Wagner, 1998. "Export Entry and Exit by German Firms," NBER Working Papers 6538, National Bureau of Economic Research, Inc.
  21. Gabriel Benito, 1997. "Divestment of foreign production operations," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1365-1378.
  22. Sourafel Girma & Richard Kneller & Mauro Pisu, 2005. "Exports versus FDI: An Empirical Test," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 193-218, July.
  23. 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.
  24. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  25. 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.
  26. Greenaway, David & Guariglia, Alessandra & Kneller, Richard, 2007. "Financial factors and exporting decisions," Journal of International Economics, Elsevier, vol. 73(2), pages 377-395, November.
  27. Jean J Boddewyn, 1979. "Foreign Divestment: Magnitude and Factors," Journal of International Business Studies, Palgrave Macmillan, vol. 10(1), pages 21-26, March.
  28. 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.
  29. Engel, Dirk & Procher, Vivien, 2009. "Export, FDI and Productivity – Evidence for French Firms," Ruhr Economic Papers 111, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
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