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Hidden champions - how young and small technology-oriented firms can attain high export-sales ratios

  • Fryges, Helmut
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    Determinants of a firm?s export-sales ratio (degree of internationalisation) are frequently discussed in the literature related to individual firms? export activities. Stylised facts show a positive relationship between firm size and firm age on the one hand and the firm?s export-sales ratio on the other hand. However, anecdotic evidence and recent empirical results revealed that it is not size or age per se that leads to a high export-sales ratio. This paper analyses the export-sales ratio of a sample of young technology-oriented firms in Germany and the UK. The empirical results confirm that neither youth nor smallness are necessarily an obstacle to realising a high degree of internationalisation. However, this requires that the firms possess firm-specific assets in order to overcome barriers to entry into the foreign market. These firm-specific assets may be acquired via conducting own R&D activities, buying novel technology from other companies, or by employing internationally experienced managers.

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    File URL: http://econstor.eu/bitstream/10419/24500/1/dp06045.pdf
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    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-45.

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    Date of creation: 2006
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    Handle: RePEc:zbw:zewdip:5435
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    1. Jens Matthias Arnold & Katrin Hussinger, 2004. "Export Behavior and Firm Productivity in German Manufacturing: A firm-level analysis," International Trade 0403007, EconWPA, revised 02 Nov 2004.
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    9. Ulrich Kaiser & Hans Christian Kongsted, 2004. "True versus spurious state dependence in firm performance: the case of West German exports," CAM Working Papers 2004-04, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
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    11. Leslie E. Papke & Jeffrey M. Wooldridge, 1993. "Econometric Methods for Fractional Response Variables with an Application to 401(k) Plan Participation Rates," NBER Technical Working Papers 0147, National Bureau of Economic Research, Inc.
    12. 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.
    13. Ernst Verwaal & Bas Donkers, 2002. "Firm Size and Export Intensity: Solving an Empirical Puzzle," Journal of International Business Studies, Palgrave Macmillan, vol. 33(3), pages 603-613, September.
    14. Daniel Sullivan, 1994. "Measuring the Degree of Internationalization of a Firm," Journal of International Business Studies, Palgrave Macmillan, vol. 25(2), pages 325-342, June.
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