Abstract
In this paper, we study the determinants of the direct and indirect export performance of firms in Central and Eastern European (C.E.E.) and Middle Eastern and North African (M.E.N.A.) countries, both jointly and separately. In particular, we address three research questions: (i) Do the firms that export indirectly display the same characteristics as those that directly export their products?; (ii) Is the role of innovation, research and development (R&D) and human capital in export performance the same for firms that export directly and indirectly? and (iii) Is there geographical differentiation between C.E.E. and M.E.N.A. countries at the firm-level determinants of export performance? The analysis is based on a firm-level database (B.E.E.P.S. V) and covers the period between 2011 and 2014. We estimate the probability of exports, controlling for country and sector-specific effects using the probit model. We find that product innovations are more important than process innovations in determining direct export performance for the whole sample of countries. In addition, we find that the level of firm productivity, spending on R&D, human capital, foreign licences and foreign ownership are important in determining the export performance of the firms that export directly but not in the case of indirect exporters.
Highlights
The growing availability of firm-level data has contributed to the development of a new strand in the trade theory literature, one that focuses on the role of firm heterogeneity in foreign market entry strategies
We address three research questions: (i) Do the firms that export indirectly display the same characteristics as those that directly export their products?; (ii) Is the role of innovation, research and development (R&D) and human capital in export performance the same for firms that export directly and indirectly? and (iii) Is there geographical differentiation between C.E.E. and M.E.N.A. countries at the firm-level determinants of export performance? The analysis is based on a firm-level database
We find that product innovations are more important than process innovations in determining direct export performance for the whole sample of countries
Summary
The growing availability of firm-level data has contributed to the development of a new strand in the trade theory literature, one that focuses on the role of firm heterogeneity in foreign market entry strategies. There are some recent studies, such as that of Taglioni and Winkler (2016), which show that indirect exporters constitute an important share of total exports and contribute to the creation of additional value added to the economy. We find that the level of firm productivity, spending on R&D, human capital, foreign licences and foreign ownership are important in determining the export performance for the firms that export directly but not in the case of indirect exporters. These findings should contribute to a better understanding of the different ways in which managers and marketing specialists in the C.E.E. and M.E.N.A. countries enter foreign markets. We summarise and conclude with directions for further research
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