Firm Export Research Articles

Is environmental labeling certification a “green passport” for firm exports in emerging economies? Evidence from China

As the demand for more environmentally friendly products continues to increase, environmental label certification (ELC), as a voluntary environmental practice (VEP), has become a commonly used strategy by firms responding the green demands of the international market. While ELC is playing an increasingly important role in global trade, how ELC affects firms’ exports, especially how it affects the exports of those firms in emerging economies, remains unknown. This study explores the impact of ELC on firms’ exports. Insights are provided from resource-based views (RBV) by analysing China's A-share listed manufacturing firms to estimate the impact of China's ELC on exports. Our empirical results show that ELC can promote firms’ exports, because ELC emphasizes firms to reduce pollutant from the source, thereby, brings about cost advantage and green product differentiated advantage to boost high-quality exports. Using a series of robustness tests, we provide corroborating evidence for our hypotheses. The export-enhancing effect of ELC is impacted by the institutional context of emerging economies, as specialized market intermediaries and greater openness to the global market strengthen the export-enhancing effect of ELC. This research not only contributes to the literature, but also provides a reference for policy-makers and managers in using ELC to develop green trade.

Export profitability and firm R&D: on China's export diversification under trade war

China has become the world's largest export economy and the Sino-US trade war since 2017 has brought about serious implications for its foreign trade. To mitigate the effect of the trade war, China has tried to diversify exports from the US to other major trade partners. This paper aims to study the impact of the trade war on the export profitability of Chinese manufacturing firms and examine the role of firm R&D activities in their export diversification process. It is found that under the trade war, firm export profitability with intensive exports to the US declined, but the negative shock is less potent for firms with more R&D activities. In addition, the resilience of R&D-intensive firms stems from two distinctive abilities, i.e., the ability to attract new customers in different alternative markets and the ability to optimize the composition of market niches.

Mandatory pollution abatement and firm export product quality

This study investigates the effect of mandatory pollution abatement on the export product quality of firms. Using the chemical oxygen demand reduction targets specified in the 11th Five-year Plan of China as an exogenous shock, we document that firms under stringent environmental regulation experience an upgrading in their export product quality, and our findings remain robust under a battery of tests. Plausible mechanisms are reduced wastewater emissions, the adoption of sewage treatment facilities, and promoted innovation. We show that the effect is highly pronounced in non-state-owned enterprises and firms located in downstream cities. Our findings provide policy implications on unintended consequences of environmental regulation on local firms’ product quality.

Has the Decline in Trade Policy Uncertainty Promoted China’s Agricultural Exports?

This article describes China’s entry into the World Trade Organization (WTO) as a quasi-natural experiment based on samples from the World Bank database, China Customs database, and China Industrial Enterprise Database from 2000 to 2007 and uses the difference-in-difference (DID) method to investigate the effect of trade policy uncertainty (TPU) on China’s agricultural exports. The study found that, first, a decline in TPU significantly increases the export volume of Chinese agricultural firms. Second, the decline in TPU significantly boosts companies engaged in general trade. Regarding export destination countries, the decline in TPU significantly promotes the agricultural firms whose export destination countries are developing countries. Regarding firms’ ownership, the promotion of agricultural exports by non-state-owned enterprises (non-SOEs) and Hong Kong-, Macao- and Taiwan-funded enterprises is even more pronounced. Third, the decline in TPU promotes the export of Chinese agricultural firms by alleviating their financing constraints. The study provides new explanations for changes in China’s agricultural exports and enriches research on the evaluation of TPU effects.

New Trade Protectionism Response to COVID-19: An Investigation on Firm Export Performance in an Emerging Country

Purpose - Given the significance of concerns raised about the global shift toward protectionism under trade policy uncertainty context, and echoed by requests to contribute to issues that concern a wider variety of stakeholders, this study aims to review new trade protection measures in response to the pandemic crisis and their effects on export performance from an emerging country’s exporters.
 Design/Methodology/Approach - Research data were gathered by surveying 613 export managers of different types of exporters in Vietnam from a list of exporters provided by Ministry of Industry and Trade, and then applied a regression model for analysis.
 Findings - The study demonstrated a negative relationship between firm export performance and six trade protectionism measures, including industrial subsidies, public-procurement restrictions, FDI restrictions, standards protectionism, green protectionism, and regional integration. Only restrictions on migrant workers had no appreciable impact on firm export performance. Additionally, only employee number, out of the three control factors, significantly and positively affected how well firms succeed in exporting.
 Research Implications - The study’s findings have significant ramifications and contributions to theory and practice in international trade for an emerging country to overcome new trade protectionism measures. To support firms in expanding export markets, the government of an emerging country should concentrate on establishing and developing policies to support exporters, especially small and medium enterprises. Firms should pursue a sustainable export strategy in light of the emergence of new trade protectionism in significant import markets.

Inter-Firm Collaboration and Export Performance: A Mediation Analysis

This study aims to encourage small and medium-sized enterprises to collaborate to enhance export rate. It investigates the influence of inter-firm collaboration on industry export performance and how this relationship is mediated by firm export performance in SMEs of Pakistan. Data was gathered using a quantitative technique based on questionnaires distributed among 491 owners and employees of the SMEs involved in exports. Data were analyzed using AMOS to determine the relationship among variables; firm export performance, inter-firm collaboration and industry export performance. Mediation analysis was tested using Baron and Kenny’s procedure. Results revealed that inter-firm collaboration is an important factor in enhancing industry export performance and this relationship is significantly mediated by firm export performance. Industry export performance is an essential element for SMEs survival and growth. The study contributes theoretically and empirically by analyzing the role of interfirm collaboration in economic development and provides important implications for owners, managers, policymakers of SMEs, and export-related government agencies on improving cooperation.

Heterogeneity, sunk cost, and export performance: A firm level study of Pakistan's textile sector

The textile sector is a significant exporting sector of Pakistan. This study examines the determinants of the export performance of Pakistani textile firms using firm-level panel data from 2008 to 2018. Under the framework of the dynamic System Generalized Method of Moment (SGMM) methodology, our findings suggest that both sunk costs and firm-specific characteristics like productivity, age, and size are important determinants of textile exports. Further, the study also observes that firms with a high number of export destinations and greater product diversification tend to export more. The year-specific dummies reveal that textile export performance is adversely affected by the energy crisis in 2012. We recommend that Pakistan should support large, experienced, and productive textile exporter firms to boost textile exports. Besides, more assistance should be provided regarding potential overseas markets to the existing and new export firms.

Digital transformation and export performance: a process mechanism of firm digital capabilities

PurposeThis study aims to investigate the logic between digital transformation and export performance by analysing a large sample of Vietnamese exporters. The theoretical model is further extended by investigating the driving role of digital transformational leadership and mediating effects of firm digital capabilities and employee exploration and exploitation innovation.Design/methodology/approachThe study sample comprised 364 middle managers at 107 export firms in Ho Chi Minh City, Vietnam. The data are analysed using a partial least square-structural equation model (PLS-SEM).FindingsDigital transformation may be an indispensable tool for enhancing the export performance of businesses. Moreover, digital transformational leadership may drive digital transformation through the mediating mechanisms of firm digital capabilities and employee exploration and exploitation innovations to achieve high export performance.Originality/valueThis initial study contributes significantly to international business theory through the lens of dynamic capabilities theory, which reveals the role of digital transformation in export performance via mechanisms of digital transformational leadership, firm digital capabilities and employee exploration and exploitation innovation.

Trade liberalization along the firm size distribution: The case of the EU‐South Korea FTA

AbstractLeading theories suggest that amongst continuing exporters, lower variable trade costs should boost exports of smaller firms by the same or greater percentage rate than larger firms. However, investigating the impact of the deep EU‐South Korea FTA with French customs data, we find robust evidence to the contrary. Applying a triple‐difference framework, we report that the FTA increased sales in the top quartile of continuous exporters by 71.5% points more than in the bottom quartile. More than 90% of that growth premium is driven by reductions in NTBs. These findings suggest an additional channel driving the distributional effects of FTAs.

Does Stronger Environmental Regulation Promote Firms’ Export Sophistication? A Quasi-Natural Experiment Based on Sewage Charges Standard Reform in China

Based on the quasi-natural experiment of sewage charges standard reform, this paper adopts a staggered difference-in-difference model to empirically investigate the effect of environmental regulation on firms’ export sophistication and the mechanism of the effect, using the matched data from the Chinese Annual Survey of Industrial Firms and Chinese Custom Trade databases from 2004 to 2013. The results show that (1) the environmental regulation policy of sewage charges standard reform significantly promotes the upgrading of firms’ export sophistication; (2) the impact of sewage charges standard reform on firms’ export sophistication is heterogeneous, in that the promotion effect of sewage charges standard reform on firms’ export sophistication is mainly manifested in simultaneous import and export firms, large-sized firms, and local firms; and (3) the sewage charges standard reform mainly through the mechanisms of innovation compensation effect and product switching effect to promote firms’ export sophistication. This paper provides empirical evidence and policy insights for governments to formulate and implement environmental protection policies appropriately.

Migration, exports and capital: what is the impact of ghettos on local firms?

ABSTRACT This paper investigates the effects of migration on the export and production techniques of agri-industrial firms in the proximity of clusters of migrants. The analysis draws on an original dataset built through interviews conducted with agri-food firms in the Foggia province (southern Italy). Over the past two decades, this area has experienced a strong influx of migrants, who have concentrated in ghettos. The results do not support a pro-trade effect, but provide evidence for both a substitution and a complementarity effect of migrants on capital endowment, depending on the type of machinery used by the firm.

New Measurement of Export Participation in US Manufacturing

We measure export participation rates in the US manufacturing sector using a new administrative dataset and compare them to participation rates constructed from the commonly used census of manufacturers (CM). At both the establishment and firm levels, export participation rates are near 40 percent in the administrative data, almost twice as high as in the CM. The discrepancy appears to result predominantly from undercounting of small exporters in the CM. Our findings call for reconsidering the conventional wisdom that around 20 percent of manufacturing firms export.

Human capital and domestic value added in exports: evidence from China

ABSTRACT Based on the data of Chinese manufacturing firms from 2000 to 2006, this study takes the university enrolment expansion policy implemented by the Chinese government in 1999 as a quasi-natural experiment, and uses the difference-in-difference (DID) method to identify the effect of human capital expansion on the ratio of domestic value added in exports to gross exports (DVAR) of firms. Results show that human capital expansion significantly improves the firms’ DVAR through the ‘intermediate product substitution’ channel (promoting firms to use more domestic intermediate inputs to replace imported intermediate inputs in production) and the ‘markup’ channel (promoting the increase of firms’ markup). At the same time, significant heterogeneity exists in the effects of human capital expansion on the DVAR of different types of firms. These results provide new empirical evidence from the perspective of firm DVAR for further understanding of the microeconomic effects of human capital.

Demand Volatility and Firm Export Margins: Evidence from Egypt

The study explains the export behavior of Egyptian firms under demand volatility in destination countries using detailed customs data and high-dimensional fixed effects. It finds that demand volatility negatively affects both the intensive and extensive export margins. The effects are particularly evident for large firms which reduce their export sales — especially over time — to more volatile destinations/products, are more likely to exit from exporting more volatile products and are less (more) likely to enter (exit) more volatile destinations. These findings confirm recent literature that emphasizes the greater elasticity of large firms to foreign demand shocks. They are also in line with risk aversion models in which the average risk premium increases with firm size. Given the disproportionate adverse impacts on large exporters, we find that higher demand volatility leads to lower aggregate exports, especially to geographically close and low trade costs countries. Accordingly, uncertainty in demand lessens the positive effect of lower trade barriers on exports.

Embeddedness beyond the lead firm in global production networks: Insights from Kenyan horticulture

Recent research on embeddedness in global production networks (GPNs) has begun to move beyond the dominant perspective on how lead firms embed into host countries to investigate how non-lead firms embed across multiple scales in a GPN. This paper builds on such work by examining both processes of how, and the extent to which, different Southern suppliers embed into GPNs, detailing the contestation, struggles, and synergies faced. Empirical evidence is provided through a case study of Kenyan horticulture. Using a mixed-method approach of interviews and surveys, the paper finds that Kenyan farmers and Kenyan export firms (KEFs) have varied ways in which they embed, with farmers more embedded (highly dependent on network relationships and participation in a GPN) and KEFs simultaneously less embedded (having a low degree of commitment towards farmers) in GPNs. Overarchingly, the results demonstrate the need to account for the complex ways in which non-lead firm actors like Southern suppliers embed in GPNs.

Legal environment, contract intensity, and export quality

In this paper, we construct a simple game-theoretic model to illustrate that improvement in the legal environment can improve the quality of final products by improving the quality of intermediate products, especially in industries with higher contract intensity. Using Chinese Customs Database and Industrial Enterprise Database from 2000 to 2006, we measure the export quality at the firm-product-country level and examine the effect of the legal environment on the export quality. Our empirical study shows that the improvement in the legal environment can raise export quality, especially at firms with higher contract intensity. Further studies show that the legal environment and contract intensity affect the import decision of firms and thus have a significant impact on product quality of export firms.

Trade Protectionism and Export Adjustment on the Extensive Margin: An Analysis Based on the China–U.S. Trade War

AbstractBased on highly disaggregated customs data from 2016–19, this paper investigates the impact of the China–U.S. trade war on the exports of Chinese firms, from the perspective of the extensive margin of product scope. The paper finds that the rise in U.S. import tariffs during the trade war led to Chinese exporters concentrating on production of their core products and shrinking their export scope. Higher import tariffs resulted in an average 2.43 percent decline in export scope and an average 1.25 percent increase in the export share of core products. The damage was particularly pronounced for intermediate products and heterogeneous products, which is consistent with the high duties. The paper provides direct evidence on the harm to export diversification caused by the China–U.S. trade war, suggesting a welfare loss from the decrease in product variety, as emphasized in the literature. This result holds after controlling for factors such as production cycles and heterogeneity.

Fiscal stress and firms’ domestic value added

This study investigates the effects of fiscal squeeze on the domestic value-added ratio (DVAR) in firm exports. Based on a tax cancelation in China, we introduce difference-in-differences (DID) estimation and show that local governments’ fiscal stresses significantly reduce the DVAR at the firm level. Firms subjected to stringent financial constraints experience a greater significant decrease in the DVAR, whereas the adverse effect is alleviated in firms receiving more financial support. This study has clear policy implications for regulators concerned with how fiscal policy affects firms’ competitive advantages and DVAR in international trade.

Financial openness and firm exports: Evidence from Foreign-owned Banks in China

Firms involved in international trade require an active and efficient financial market to facilitate their credit services and this is enhanced by financial openness. This study identified the impact of financial openness on Chinese firms' exports by 386 foreign-owned banks in China from 1996 to 2019 as a quasi-natural experiment. We constructed an estimation technique that combines the parallel trend test (PTT) and propensity score matching (PSM) with difference-in-difference (DID) estimators. We found that the gross and selection effects of financial openness are positive, and significantly increase firms' exports by 27.5%. Moreover, the impact differs for various firms: in terms of scale, small and micro firms benefit the most, and in terms of industry, manufacturing firms achieve the highest growth. Additionally, foreign-owned banks reduce firms' transaction costs and production expenditures, while increasing their total factor productivity (TFP) and credit alternatives.

Environmental information disclosure and firm export: evidence from China

In this paper, we empirically investigate how a governmental environmental information disclosure (EID) program in China affects the extensive and intensive margins of export for a panel of Chinese industrial firms. The results show that stricter enforcement of environmental disclosure discourages firms’ participation in export. However, the export volume of remaining exporting firms increases following more environmental disclosure. The results are robust to a battery of robustness checks as well as an IV estimation. Mechanism analysis reveals that firms’ propensity of innovation increases after stricter enforcement of disclosure, lending support for the Porter hypothesis.