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Exit in globalising industries: the role of international (out)sourcing

Author

Listed:
  • Coucke, K.
  • Sleuwaegen, L.

    () (Vlerick Leuven Gent Management School)

Abstract

This paper studies the impact of globalisation on the exit behaviour of domestic and foreign firms in the manufacturing industries of Belgium, one of the most open economies in the world. The strongest effects are found to come from rising import growth and rising multinational firms penetration of the industry, which systematically increase the probability of exit of (inefficient) domestic firms. Product differentiation and international (out)sourcing moderate this impact and lower the risk of exit. Controlling for productivity differences across firms, exporting on itself does not lower the probability of exit. Subsidiaries of multinational firms are found to be subject to similar disciplinary forces from import competition as domestic firms but do not show exit to respond to the same passive learning process.

Suggested Citation

  • Coucke, K. & Sleuwaegen, L., 2006. "Exit in globalising industries: the role of international (out)sourcing," Vlerick Leuven Gent Management School Working Paper Series 2006-14, Vlerick Leuven Gent Management School.
  • Handle: RePEc:vlg:vlgwps:2006-14
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    File URL: http://www.vlerick.be/en/2497-VLK/version/default/part/AttachmentData/data/vlgms-wp-2006-14.pdf
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    Cited by:

    1. Veerle Miranda & Marialuz Moreno Badia & Ilke Van Beveren, 2012. "Globalization drives strategic product switching," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 45-72, April.

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    Keywords

    Exit; Sourcing; International Competition;

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