Firm Export Research Articles

Understanding the role of organizational intellectual capital on developing absorptive capacity to strategize innovation ambidexterity

PurposeThe purpose of this paper is to empirically investigate the impact of organizational intellectual capital (IC) components on absorptive capacity (ACAP) such as potential absorptive capacity (PACAP) and realized absorptive capacity (RACAP). Furthermore, it attempts to investigate the mechanism through which PACAP and RACAP jointly influence innovation strategies (i.e.) exploitative and exploratory innovations.Design/methodology/approachThis is an explanatory research using a deductive approach. This study uses survey data from 184 manufacturing export firms analyzed through partial least squares structural equation modelling.FindingsThe results have found that the cognitive and social capital of a firm positively affects PACAP and RACAP, whereas relational capital has a significant effect on RACAP. Moreover, the study reveals that both potential and realized absorptive capacities considerably lead to the development of organizational exploitative and exploratory innovation strategies.Research limitations/implicationsThe research focused on two driving factors, i.e. IC components and ACAP dimensions, and overlooked how each component of IC and ACAP influences ambidextrous innovative strategy.Practical implicationsProviding managers with insights about the critical role of developing IC to facilitate the transfer and exchange of crucial absorptive capacity necessary for ambidextrous innovative strategy.Originality/valueThis study makes a significant contribution to the existing literature by highlighting the importance of ACAP and provides useful insights for firms in developing economies to improve their exploitative and exploratory innovation capability. This study likewise reveals the significance of the four dimensions of IC, which can facilitate bringing in knowledge from developing economies.

Firm export, trade war, and R&D investment of family firm

Firm export, trade war, and R&D investment of family firm

Property rights protection, financing, and firm exports: the impact of China’s property law enactment

Chinese property law plays a significant role in the reforms of the Chinese economic system by establishing protective legal frameworks. This study utilizes the enactment of the Property Law in 2007 as a quasi-natural experiment and employs the difference-in-differences method to investigate the law’s impact on firm exports in China. The results indicate that firms’ exports experienced a significant increase after the law’s enactment. These findings remain robust after controlling for additional fixed effects, alternative subsamples, and measures of core variables. The law affects firm exports through two mechanisms: informal financial channels, such as trade credit with trading partners, and formal financial channels, such as borrowings from banks and other financial institutions. Heterogeneity analyses suggest that the export effect is positively related to firms that rely heavily on external financing and are not politically connected. Moreover, this correlation is accentuated in regions characterized by more conservative credit development and heightened efficiency in law enforcement. In addition, the promotional effect is more pronounced in firms exporting to high-income countries. These findings suggest that property rights protection in China significantly impacts trade and provides a comparative advantage to firms’ exports.

Why do low productivity agricultural firms export?

ABSTRACT We use data from Chinese agricultural firms to confirm that low productivity agricultural firms (LP-AFs) export; AFs still have an ‘learning by exporting effect’, and increasing productivity promotes the AFs’ exports scale. China’s domestic market segmentation, the supply and demand capacities of agricultural products, and export experience of firms are key variables that determine the export of LP-AFs in China.

Trade Policy and Productivity Growth: Why Do Sudanese Manufacturing Firms Export Less

This paper aims to study the role of trade policy on industrial development and productivity growth. We analyze the relationship between trade policy and productivity growth of manufacturing firms in Sudan. For this work, we evaluate the previous trade policy instruments that implemented between 2000 and 2022. The study finds that Sudan’s trade policy has significant positive effects on manufacturing firms’ productivity. The study reveals that manufacturing firms offer the largest scope for productivity gains through trade policies aiming at enhancing economic growth. The study also found there was a weak support for investment promotion and tariff protection. This study recommends that building a proper trade policy to support manufacturing firms and adopt new technologies and focusing on labor intensive industries are the key success to sustain productivity growth and enable manufacturing firms’ export.

Family ownership, finance for innovation, and exports. Evidence from European micro and small firms

ABSTRACT This study focuses on the impact of ownership and the finance for innovation on the exports of micro and small family-owned firms (FFs) compared with nonfamily-owned firms (non-FFs) for 11 European Union countries from 2014 to 2020. The motivation for the study lies in the fact that when combining ownership and innovation, the net effect on exports is not always predictable. Although family ownership negatively affects exports, the gains from innovation are significantly higher for non-FFs than FFs when studying the extensive margin of exports. This implies that the innovation effect is not sufficient to close the export gap for FFs. Regarding the intensive margin of exports, the magnitude of the innovation effect does not differ by firm-type. Thus, FFs show a low intensive margin just because of their ownership. The results hold for different model specifications and individual countries.

Adaptive Estimation and Uniform Confidence Bands for Nonparametric Structural Functions and Elasticities

Abstract We introduce two data-driven procedures for optimal estimation and inference in nonparametric models using instrumental variables. The first is a data-driven choice of sieve dimension for a popular class of sieve two-stage least-squares estimators. When implemented with this choice, estimators of both the structural function h0 and its derivatives (such as elasticities) converge at the fastest possible (i.e. minimax) rates in sup-norm. The second is for constructing uniform confidence bands (UCBs) for h0 and its derivatives. Our UCBs guarantee coverage over a generic class of data-generating processes and contract at the minimax rate, possibly up to a logarithmic factor. As such, our UCBs are asymptotically more efficient than UCBs based on the usual approach of undersmoothing. As an application, we estimate the elasticity of the intensive margin of firm exports in a monopolistic competition model of international trade. Simulations illustrate the good performance of our procedures in empirically calibrated designs. Our results provide evidence against common parameterizations of the distribution of unobserved firm heterogeneity.

Information infrastructure construction and firm export performance in China

This paper examines the causal relationship between information infrastructure construction and firms’ export performance. Adopting the "Broadband China" strategy as a quasi-natural experiment, we conduct a difference-in-differences estimation to demonstrate that the implementation of information infrastructure construction is a significant contributor to firms' export performance, an effect that withstands extensive robustness tests. We identify three main channels through which information infrastructure construction promotes firms' export performance: facilitating digital transformation, expanding firm production scale, and enhancing firm supply chain management capabilities. Particularly, the export response to information infrastructure construction is stronger for manufacturing firms, high-tech firms, and those firms with abundant human capital. Given significant ongoing information infrastructure investment in many emerging countries, this result provides important new information on the impacts of information infrastructure construction on exports.

Whose Aid is Beneficial to Firms' Exports? Evidence from a Post‐disaster Aid Experiment in China

AbstractPost‐disaster aid is widely regarded as important in helping local recovery and development. This paper examines the effectiveness of post‐disaster aid on exports, which are a driving factor of economic development. It reports a natural experiment in China – the case of post‐disaster aid following the Wenchuan earthquake in 2008 – to examine how donors' experiences affected the exports of manufacturing firms in disaster‐stricken counties. The export experience of the donor was important. Aid coming from donors with more export experience was more beneficial to the exports of firms in recipient counties than aid from less experienced donors. “Learning from the donor” is a potential channel through which this effect occurred. That is, firms in recipient counties learned from donors' export experience by exporting more products similar to those of donors, exporting more to the destination countries of donors, and participating in the donors' supply‐chain networks by exporting more of the donors' exports. Such “learning from the donor” effects show that knowledge spillover can occur between spatially distant parties, which complements the literature.

Unveiling the critical nexus: Volatility of crude oil future prices and trade partner’s cash holding behavior in the face of the Russia–Ukraine conflict

This study investigates the spillover effects of the Russia–Ukraine conflict on corporate finance, particularly focusing on cash-holding decisions of Chinese-listed firms from Q1 2020 to Q1 2023. Utilizing a Difference-in-Difference approach, we analyze how firms with trade links to Russia and Ukraine adjust their cash holdings in response to the conflict. A significant aspect of our analysis is the emphasis on Shanghai crude oil futures prices, alongside West Texas Intermediate (WTI) prices, to understand the impact of oil market volatility on these decisions. Our findings reveal that such volatility, especially in Shanghai crude oil futures, significantly influences firms’ cash holdings, with an increased tendency to hoard cash in times of rising uncertainties. This behavior is particularly pronounced in non-state-owned, general trade, and export firms. The study highlights how geopolitical tensions and fluctuating oil prices affect corporate financial strategies, offering insights for policymakers and corporate managers in navigating economic uncertainties.

Sustainable development, environmental innovation and export firms: The moderating roles of external collaboration, creativity enhancement and internal development processes

AbstractExport firms are vital to a country's economic development and are distinctively positioned to engage in environmentally sustainable innovation. We extend the resource‐based view about the unique cross‐border challenges faced by export firms and the advantage they can generate from engaging in sustainable development. Using a large sample of 4949 Taiwanese export firms, our main effects test confirms the link between export firms and environmentally sustainable innovation. Furthermore, we find that creativity enhancement processes and internal development processes positively moderate the relationship, whereas external collaboration processes negatively moderate it. We contribute to the literature on the contingent factors that explain environmentally sustainable innovation for export firms. Additional tests are presented and discussed along with policy implications, future research directions and conclusions.

The digital economy and markup: Based on herd behavior and peer effect

The relationship between digital economy and signal information on firms‘ markup has been overlooked and not well explained, especially in the emerging economies. When there is information asymmetry or too much information, the export decisions of firms are not completed independently, but the result of the comprehensive trade-off of the export signals issued by the 'neighbors'. This paper discusses the impact of the development of digital economy on the markup of export firms by distinguishing two perspectives of export signal, namely herd behavior and peer effect. We find that the digital economy has a positive impact on firm markup. There is substitution effect in digital economy and export signals, and digital economy acts price bonus by influencing export signals. The growing popularity of market signals could offset some of the advantages of the digital economy on export markup for companies. In addition, our paper finds that foreign-owned firms, large-scale firms, highly competitive industries and non-digital economy industries adjust their markups more significantly when they were affected by export signals.

The Effect of Availability of Foreign Exchange and Devaluation of Birr on the Performance of Companies in Ethiopia (Instance of Sample Company)

When a country devalues its currency, some firms and countries generally benefit from any resulting changes in relative prices, while other firms and countries are relatively unaffected or suffer a loss in competitiveness. By taking a sample of import and export firms, this study assessed the effect availability of foreign currency and devaluation of birr on performance of firms in Ethiopia in general. More specifically it intended to assess the main challenges to access foreign currencies, assess the effects of foreign currency shortage on import/export firms, assess the effects of devaluation of Birr on import/export firms and assess company-specific factors. The study used both primary (collected through questionnaire) and secondary data collected from financial statements of the companies. This study applies both the descriptive and inferential analysis. After detail analysis, the increase in private driven business, Informal channels of inflow of foreign currency, increased population and Corruption will worsen appropriate use of forex and aggravate challenges of shortage of forex. And also it is found that the foreign currency shortage has affected the firms in many ways such as profit loss, lay off employees and discourages new investment. On the other hand devaluation of birr against the foreign currencies makes Ethiopian commodities to be competitive in international markets. And it can also attract new investments and export.

Determinants of Aggregated Embodied Carbon Intensity in Global Bilateral Exports by Firm Heterogeneity

Reduction of carbon emissions embodied in trade is essential in the context of economic globalization. However, studies have not yet measured the aggregated embodied carbon intensity (AEI) in global bilateral exports from the perspective of heterogeneous ownership firms and its key determinants such as environmental and trade policies. Using the hypothesis extraction method and gravity model, the study examines these issues with the data of domestic and multinational firms from 44 regions throughout the world between 2005 and 2016. The findings indicate the following: (1) The AEI in global bilateral exports of multinational firms generally outperforms domestic firms around the world, with the exception of some European Union member states. (2) Carbon pricing policy can better improve the bilateral AEI of domestic and multinational firms than environmental tax policy. Moreover, compared with multinational firms, carbon pricing policy can better reduce the carbon emissions of domestic firms but bring them much greater economic loss. (3) A common language favors domestic and multinational firms' environmental surplus in global bilateral exports, while a colonial relationship leads to their environmental deficit. (4) Compared with bilateral tariffs policy, improving economic growth is more helpful to reduce the bilateral AEI of domestic and multinational firms.

Firm exports and performance: Evidence from Serbia

Firm exports and performance: Evidence from Serbia

Climate effects on the diversification strategy of export firms: Evidence from China.

Using a multi-product trade model, this study investigates the impact of temperature on firms' diversification in the export market. Using export and meteorological data of Chinese firms from 2000 to 2016, the empirical results confirm an inverted U-shaped relationship, implying that extreme temperatures significantly reduce firms' export product diversification. The analysis shows that extreme temperatures primarily reduce the variety of both new and existing products, with a less robust effect on product exit strategies. General trade firms are more adaptable to extreme temperatures than processing trade firms, and are likely to maintain diversified strategies. Stronger regional financial markets and higher energy consumption increase the adaptability of local firms to extreme temperatures. Firms have not yet adapted to local climatic norms. Furthermore, extreme temperatures also partly inhibit diversification of export destinations and relationships. The results of the study show that as climate change intensifies, leading to more frequent extreme temperatures, firms will face significant hurdles in pursuing diversified development strategies, pointing to increasing challenges ahead.

Capital market liberalization and firm export performance: evidence from China’s Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programmes

ABSTRACT Using a quasi-natural experiment method, this study examines the effects of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect (SHKS) programmes on Chinese listed firms’ export performance. We find that the SHKS positively correlates with firms’ export performance, enhances export capacity, and affects export binary margins. The SHKS influences export capacity and binary margins by improving production efficiency, promoting R&D, and easing financing constraints. Finally, the positive effects of the SHKS are particularly pronounced for state-owned enterprises (SOEs), manufacturing firms, and highly financialised firms. These findings contribute to a deeper understanding of the impact of China’s ongoing capital market liberalization on listed firms’ export performance, providing valuable insights for policymakers.

Labour market flexibility and domestic value‐added trade: Evidence from the hukou reform in China

AbstractChinese manufacturing firms have seen an intriguing rise in domestic value‐added content in exports (DVAR) despite their deepening engagement in global value chains (GVCs) since 2001. This article investigates whether the rise of DVAR in China can be attributed to changes in labour market flexibility by using the staggered relaxation of Chinese hukou policies across cities and time as a quasi‐natural experiment. Using combined firm‐level data and transaction‐level trade data from 2000 to 2013, this article finds that the relaxation of labour market flexibility through hukou reform has significantly increased the domestic value‐added exports of Chinese firms. Firms exposed to hukou reform tend to allow for more employment adjustment and substitute domestic materials for imported intermediates, which raises the DVAR of Chinese manufacturing firms. This effect is more prominent for non‐SOE firms, foreign‐invested firms, processing firms, coastal firms and firms in the upstream sectors of GVCs.

Can Online Platforms Promote Women-Led Exporting Firms?

Abstract How can policymakers promote women-led exporting firms? In this paper, we study the role of online business platforms to reduce informational barriers to exporting for women entrepreneurs. We hypothesize that, if the costs associated with accessing digital platforms are more symmetric across gender than traditional trade costs, digital trade platforms can play an important role in making trade more gender equal. To assess this hypothesis, we combine information on firms’ participation in ConnectAmericas, a free and purely informational online platform, and detailed firm-level export data of a developing country over a long period. We find that participation in this platform is associated with a significantly larger increase in exports for women-managed firms than for men-managed firms in otherwise identical products and destinations. Given existing evidence on the role of women-managed businesses in reducing gender earnings inequality, these results suggest that policies which encourage women participation in online environments, to reduce the informational barriers associated with operating in foreign markets, have the capacity to promote gender equality more broadly.

Finance dependence and exchange rate pass-through: Empirical evidence from China

Does the degree of finance dependence, defined as firms' reliance on external finance for regular production activities, determine exporters' heterogeneous responses to real exchange rate shocks? This paper develops a stylized model to illustrate the role of finance dependence in shaping exporters' pricing decisions when the bilateral real exchange rate fluctuates. The model features distribution costs, endogenous markup, and firm heterogeneity. In the model, finance dependence can impact firms' export pricing decisions in a way isomorphic to firm productivity but in the opposite direction: firms with high finance dependence have a high demand elasticity and a low price elasticity to exchange rate fluctuations. Therefore, in response to real exchange rate shocks, financially more dependent firms exhibit lower exchange rate pass-through into export prices denominated in home country currency (RMB). To assess the model prediction, I develop a firm-destination-year-specific measure of finance dependence based on the basket of goods that firms export and employ the Chinese manufacturing firm export data from 2000 to 2006 for analysis. The empirical test is carried out at the most disaggregated firm-product-destination level and confirms the model prediction.