Firm Export Research Articles

Foreign competition and innovation

Empirical studies have found that enhanced foreign competition can encourage or discourage innovation. To address this relationship, I examine a market structure in which a small number of large multi-product oligopolists compete with a large number of small single-product firms in the same industry. The single-product firms are short-lived while the multi-product firms live forever, and the large firms invest in innovation in order to enlarge their product spans. All firms export. I show that an increase in the competitiveness of foreign firms can increase or reduce innovation efforts of a large multi-product firm. Moreover, changes in the incentives to innovate can be different for more-productive and less-productive oligopolists. As a result, aggregate sectoral innovation may rise or decline, depending on the productivity distribution of the oligopolists. I also show that changes in short-term operating profits may not be aligned with changes in the incentives to innovate.

Effect of Offshoring on Exports of Firms in South Korea

This study empirically investigates the export-magnification effect of offshoring using a firm-level panel dataset from the manufacturing sector in South Korea. It estimates the impact of offshoring activities on export performance by examining intra-firm and arm’s length offshoring. The empirical evidence demonstrates the export-magnification effect of offshoring on both export market participation and export intensity. Particularly, the export-magnification effect of offshoring still exists among export entrants switching from non-exporters to exporters. Moreover, a greater export-magnification effect from intra-firm offshoring than from arm’s length offshoring is found using instrumental variable (IV) Tobit and probit models. This indicates that the vertical integration of production processes through intra-firm offshoring has a greater effect on export performance than international outsourcing to third parties.

Real Consequences of Shocks to Intermediaries Supplying Corporate Hedging Instruments

Abstract I show that shocks to financial intermediaries supplying hedging instruments to corporations have real effects. I exploit a quasi-natural experiment in South Korea in 2010, where regulations required banks to hold enough capital for taking foreign exchange derivatives (FXD) positions. Using variation in exposure to this regulation across banks, I find that the regulation caused a reduction in FXD supply, leading to a significant decline in exports for firms contracting derivatives with more exposed banks. Results indicate the crucial role of intermediaries in allocating risks through derivatives provision and establish a causal relationship between financial hedging and real economic outcomes.

Labour rights protection and export expansion: Evidence from SA8000 certification

Protecting labour rights is an important approach to shaping the new advantages of trade competition and achieving high-quality development of China’s export trade. This paper considers SA8000 certification as the criterion for labour rights protection and manually collects information from firms certified by the National Certification and Accreditation Administration of China. Next, we investigate the effects of SA8000 certification on firm exports. The results show that SA8000 certification significantly expands the export scale while improving export quality. The mechanism analysis shows that the improvement effects are achieved in three ways: reducing operating costs, improving social reputation and increasing labour efficiency. Moreover, the positive effects of SA8000 certification are more profound for resource-intensive firms, non-state-owned firms and large firms. Our study provides an important reference for safeguarding labour rights and reconstructing new competitive advantages in exports.

Heterogeneity and nonlinearity in the relationship between rediscount credits and firm exports

Export credits are used extensively throughout the world to temper the negative effects of financial constraints on exports. In this paper, we focus on a particular form of subsidized export credits, namely, an export rediscount credit program implemented by the Central Bank of the Republic of Türkiye. For this purpose, we create a detailed firm-level data set that matches monthly firm-level export data with credit and financial statement data. Our results show that exports by firms that use rediscount credit increase significantly over a six-month horizon and that the amount of credit and export growth have a positive relation. Moreover, the relation between the credit amount and export volume is not linear; the correlation starts to decline after a certain point. Our results also reveal heterogeneity with respect to size: exports increase more after using rediscount credit for small firms than large firms.

Why do some African firms export? The role of regional economic communities?

AbstractThis article examines whether African manufacturing firms are strategically located for regional market access. The study uses a large dataset from the World Bank Enterprise Surveys and is based on 6800 firms from 26 African countries. The study findings show that firms located in countries with dual membership to Regional Economic Communities (RECs) exhibit a significantly higher propensity to export than firms in countries affiliated with a single REC. Additionally, our findings suggest that RECs enhance export participation by mitigating customs delays. However, constraints in the business environment can hinder the propensity of firms to export. In particular, the study identifies informal competition and power outages as substantial barriers that increase the cost of doing business and diminish the potential benefits of REC membership. These results underscore the importance of advancing economic integration across Africa to bolster export participation. Additional improvements in the domestic business environments should address the constraints that hinder firms' international competitiveness.

Addressing Unemployment through the Coir Industry: An Analysis of National Efforts and Challenges

The coir industry in Kerala, the birthplace of Indian coir, is facing significant challenges due to mechanization, leading to widespread labour displacement and migration. This issue is not adequately addressed by government policies, as unemployment affects all segments of the industry and negatively impacts disadvantaged social groups. The decline in the coir industry is causing a shift in the manufacturing sector, with small-scale and household sectors being abandoned and large export firms moving to other states. This article provides insights into the difficulties in finding employment and the rising rate of unemployment in the context of the coir industry, a field often disregarded in national economic policies. Using a mixed-methods approach that incorporates surveys, structured interviews, and secondary data analysis, the study looks at the relationship between unemployment and the modernization of coir enterprises, concentrating on how these changes effect job prospects and the socioeconomic position of workers. According to the findings, despite consistent government support, other initiatives are insufficient, resulting in a significant loss of employment, labour displacement and frequent labour migration.

The Effect of Trade Policy Uncertainty on Green Technology Innovation: Evidence from China’s Enterprises

Promoting green technology innovation is essential for sustainable development and the transition to a low-carbon economy. Using data from listed manufacturing companies in China from 2000 to 2020, this paper takes the establishment of permanent normal trade relations with the United States after China’s accession to the WTO as a quasi-natural experiment and uses the difference-in-differences method to study the impact of the decline in trade policy uncertainty on firms’ green technology innovation. The results show the following: (1) Reduced trade policy uncertainty significantly enhances green technology innovation in firms. (2) Further research finds that the decline in trade policy uncertainty mainly promotes the level of the green technology innovation of firms by alleviating financing constraints faced by firms and intensifying market competition. (3) A heterogeneity analysis reveals that the impact is more pronounced in firms with lower capital intensity, higher growth, export firms, and firms exporting to the United States. This study offers micro-level empirical evidence from China on the economic outcomes of external trade policy changes from the perspective of firms’ green technology innovation and provides insights into how the government should respond to the risks of external trade frictions and improve firms’ sustainable development in the future.

Export cost of air pollution: A regression discontinuity design

This study examines the impact of air pollution on exports in China using a regression discontinuity design based on the Qinling Mountains-Huai River line. The findings show that air pollution harms firm exports, with a more pronounced impact on non-state-owned enterprises, heavily polluting industries, and densely populated regions. Specifically, a 1 % increase in air pollution correlates with an average reduction of 0.661 % in exports. These inhibitory effects are mainly caused by decreasing productivity, reducing markup rates, damaging regional quality reputations, causing labour resource misallocation and strengthening environmental regulations. Although air pollution spillovers from neighbouring cities may temporarily boost local firm exports and total production, they do not fully mitigate the overall negative impact of air pollution.

Terror in the City: Local Terrorism and Firm Exports

Abstract In this paper, we examine the relationship between terrorism and exports at the firm-level. We use a panel data of 301 firms listed on the Pakistan Stock Exchange and records of terrorist attacks in Pakistani cities from 1999 to 2014. By calculating city-level terrorism indices, the study reveals significant variations in the frequency of terrorist incidents both between cities and within cities over different time periods. Our panel regressions show that firm exports are correlated with terrorist attacks in the cities where the firms are located, and these correlations are statistically significant even when terrorism is lagged up to six years. Interregional spillover effects of terrorism are less pronounced. While a negative correlation can be found between firm exports and our terrorism indices, the correlation with domestic sales tends to be statistically insignificant. The findings shed light on the persistent link between local terrorism and firms’ international and domestic operations.

How does internet finance affect firm exports? Evidence from China

Internet finance, which can be accessed and delivered through internet technology, has become increasingly important in financial markets. This study examines how internet finance affects the extensive and intensive margins of firm exports. We find that internet finance increases both the extensive and intensive margins of firm exports, with the results varying according to firm type. Specifically, internet finance (i) enhances the extensive margin for high-tech firms more than for low- and medium-tech firms; (ii) improves the extensive margin for large firms rather than for small firms; and (iii) benefits the intensive and extensive margins for high government subsidies firms more than for low government subsidies. Moreover, internet finance promotes exports by alleviating financial constraints and reducing the fixed costs of firm exports.

Command thy blessing from above: vertically delegated carbon reduction targets and firm export performance in China

Command thy blessing from above: vertically delegated carbon reduction targets and firm export performance in China

Home Peers, Business Owners’ Gender, and the Export Intensity of SMEs

Small and medium-sized enterprises (SMEs) can improve their export performance by co-locating with export firms from the same industry and country. However, the export implications are yet to be addressed systematically. This study investigates when and how women-owned SMEs convert their geographic proximity to home peers through social proximity and cognitive proximity into high export intensity. We develop a nuanced knowledge spillover perspective incorporating gender mechanisms to clarify the relationship between home peers and SMEs’ export intensity at the regional and national levels. To test our hypotheses, we designed quantitative research using a survey database from Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises (SFGSME), with a sample of 9,977 Canadian SMEs. Our study shows that, among other things, home peers’ positive impact on SMEs’ export intensity is more significant when their owners are exposed to a larger number of relatively close same-gender home peers (i.e., same-gender regional home peers). Moreover, we show that such positive home-peer effects on SMEs’ export intensity are even stronger for women business owners than men business owners. We clarify our contributions by discussing the theoretical and practical implications of our findings. By demonstrating the significance of same-gender regional home peers for women owners, we contribute to the knowledge spillover perspective on exporting, emerging research streams on home peers, and women entrepreneurship research in the international entrepreneurship field. Our findings also suggest that women entrepreneurs can particularly benefit from government-funded export promotion programs when the programs are appropriately designed and promoted to women entrepreneurs.

THE EFFECT OF EXPORT PROMOTION PROGRAM TOWARDS SMALL-MEDIUM ENTERPRISES’ EXPORT PERFORMANCE: A GOVERNANCE PERSPECTIVE

This paper investigates the effectiveness of export promotion programs (i.e., information, experiential, and financial supports) towards small-medium enterprises (SMEs) export performance. The research framework is guided by the Research-Based View. A sample of 116 Malaysian small and medium size exporter firms was tested by using the model. The data were analyzed through a partial least square structural equation modelling approach. Study results show that all three supports in the export promotion program improve SMEs’ export performance with the mediating effect of network role. The findings show that the implication of the impact of export promotion programs on export performance is justified. Besides, it also validates the importance of networking in using support from government agencies. The findings can also help SMEs engage with foreign buyers or trade organizations to profit from trade fairs and trade exhibits, promoting promotion programs on a global scale. Last but not least, government agencies can also strengthen international trade relations and foreign diplomacy for exporters to boost their trade competitiveness.

Pollution reduction by rationalization hypothesis and water pollution in China

This paper empirically investigates pollution reduction by rationalization hypothesis in China. We study the heterogeneous firm’s export effect on water pollution in China. We use China’s firm-level data from 2000 to 2012 to estimate the firm’s heterogeneity of export effect, composition effect, and technique effect on water pollution. We find that intra-industry agglomeration produces a competition effect, and more productive firms can export with less polluted water. More productive firms can export with less polluted water by reallocating more productive labor from dirty firms. We find an inverted U-shaped relationship between a firm’s productivity and water pollution. Intra-industry agglomeration drives up labor productivity; higher productive firms export while producing more polluted water initially. When a firm’s productivity is increasing, export activity produces less polluted water. More export induces less water pollution for high productivity firms. We conclude that the mechanism of pollution reduction by rationalization hypothesis does exist for water pollution in China. Trade liberalization causes some firms to become cleaner, even though we observe relatively clean exporting firms and relatively dirty domestic producers at different productivity stages. Productivity-induced rationalization causes water pollution to fall with high firm productivity. Water pollution in different regions has disparities. Eastern area in China is more likely to produce more polluted water than the rest of China.

Plant-level adjustments to imports and exports at the extensive margin

This paper presents an empirical analysis of plant level responses to the China trade shock based upon a DSGE framework with heterogeneous firms. The empirical analysis shows that soaring imports from China are associated with a higher probability of plant closure. By contrast, firms in export oriented industries are less likely to exit. We rationalize these findings by several counter-factual experiments based upon a DSGE framework. Imports always raise the exit rate but the export-effect is ambiguous. More exports fuel competition among domestic rivals associated with more exits. However, this competition effect disappears when the share of exporters is extremely high. The effects of imports and exports on firm entry are close to zero in both theory and empircs. We also introduce a novel productivity shock channel. Additional export sales better protect firms from other shocks. We show this by introducing negative productivity shocks into the model.

Pricing to Market Behavior: Evidence from Albanian Exporting Firms

Pricing to Market Behavior: Evidence from Albanian Exporting Firms

The effect of software registration on manufacturing export

ABSTRACT Considering the pivotal role of the software industry in the digital economy, this article investigates the effect of software registration on China’s manufacturing exports from 2000 to 2013 against the backdrop of rapid growth in the digital economy and international trade. Our results indicate a positive association between software registration, a unique proxy for digital economy development, and manufacturing firm exports. This finding remains robust across various tests, including Bartik IV estimation, different estimators, and subsample analyses. Mechanism analysis suggests that software registration may bolster exports by reducing firms’ production and operational costs while mitigating information frictions in international markets, thereby incentivizing firms to expand their export activities to diverse markets. Furthermore, extended analyses reveal heterogeneous impacts across firm ownership, regions, industries, and destinations. Overall, our findings underscore the significant linkage between software registration and firm exports, providing a novel perspective on the digital economy’s influence on international trade.

The Effects of the Development Zone Upgrading on the Diversification of Firm’s Product Exports: Evidence from Chinese Exporters

Against the backdrop of frequent international trade frictions, reducing external risks in export trade through industrial policies has become crucial for China’s high-quality and steady foreign trade development. This paper examines the impact of development zone upgrading policies on the diversification of firm product exports by using a time-varying difference-in-differences model. We find that after the upgrading of development zones, the diversification of firm product exports increases by 2.13%, and concentration decreases by 1.33%. Moreover, this policy has a stronger impact on the diversification level of product exports for firms upgraded to customs special supervision areas, located inland, and engaged in general trade. These conclusions remain robust even after conducting additional robustness tests using alternative measures of the dependent variable, different identification methods for development zone upgrading, and controlling for other industrial policy effects. Furthermore, the upgrading of development zones improves export diversification through three main channels: enhancing firm innovation capabilities, optimizing management efficiency, and providing financial support to firms.

Research on the Impact of Trade Policy Uncertainty on the Digital Transformation of Chinese Export Firms

Abstract This paper uses data from listed companies in China from 2007 to 2022 to prove that the increase in trade policy uncertainty has promoted the digital transformation process of Chinese export firms. Through theoretical analysis and empirical testing, we found that the promotion effect of trade policy uncertainty on the digital transformation of Chinese export firms is related to trade costs. Rising trade policy uncertainty has increased trade costs, which in turn has forced Chinese exporters to accelerate their digital transformation. Digital capabilities are used to resolve cost challenges brought about by trade policy uncertainty. In addition, this paper also finds that when trade policy uncertainty promotes the digital transformation of Chinese exporters, foreign investment will significantly strengthen this role, while financing constraints will weaken this role, reflecting the importance of foreign investment. Finally, we found that the increase in trade policy uncertainty reduces the imbalance of digital development levels in industries and regions, promotes the digital transformation of industries and regions with lower digitalization levels, and is conducive to promoting the balanced development of digitalization in industries and regions in a country. Keywords: trade policy uncertainty, digital transformation, Chinese export firms.