Indirect Export Research Articles

Firm heterogeneity and export behavior: evidence from Tunisia

ABSTRACT We use unique enterprise survey data to explore the export behavior of firms in Tunisia, a small, trade-dependent country with a complex policy environment regarding exporting. Firms may export directly or indirectly through intermediaries, and can also sell to ‘offshore’ firms, which are export manufacturing firms with special legal status. Firm size, a proxy for productivity, is strongly associated with exporting of either type as well as with sales to offshore firms. In contrast to some studies, exporting is not positively associated with firm age (i.e., experience). Domestic-owned firms are more likely to use intermediaries to export while foreign-owned firms as well as those with more educated managers are more likely to export directly. Multinomial logit results reject the hypothesis of progression from indirect exports through direct plus indirect exporting and then to direct-only exporting as firm size increases; instead, the largest exporting firms are more likely to combine direct and indirect exporting, possibly to reduce risk. The findings from this study – the first to examine the heterogeneity of exporting behavior in Tunisia – reveal a complex picture of such behavior and confirm the importance of trade intermediaries for less sophisticated firms (those with lower manager education and internet access), pointing to potential measures to encourage exporting among such enterprises. The findings also suggest that efforts to encourage exporting may also improve firms’ ability to sell to ‘offshore’ firms, enhancing the so far elusive linkages of that sector with the rest of the economy.

The pro‐competitive effects of indirect export exposures: Evidence from China

AbstractUsing China's accession to WTO in 2001 as an episode for trade liberalisation, this paper empirically investigates whether export expansions affect firms' markup adjustments through local production networks. Following Helm (2020), we construct an indirect local export exposure measure to capture the degree to which firms in each prefecture‐industry cell are indirectly affected by export expansions of other local industries. To analyse the role played by local production networks, we further decompose indirect export shocks into upstream and downstream shocks. Combining this with markups estimated following De Loecker et al. (2016), our empirical results suggest that the average level of indirect export shocks would lead to a 0.363 decrease in markups. This magnitude accounts for 6.862% of overall markup changes during 2000–2007. In particular, the baseline results are driven by local indirect shocks from downstream industries. Further empirical analysis shows that reductions in firms' markups are induced by increased competition, which can be summarised as the “indirect pro‐competitive effects”. Further analysis at the prefecture‐industry level reveals that the impact mainly exists at the within‐firm margin, not at the between‐firm, or entry/exit margin.

Direct or Indirect Exporting? The Joint Influence of Gender and Immigration Background on Export Strategies of Canadian SMEs

Given the challenges women-owned small and medium-sized enterprises (SMEs) face in global markets, we investigate the effects of gender and immigrant background on their direct versus indirect export strategies. Drawing on insights from social capital theory, our analysis consists of a sample of 109 Canadian SMEs. We found that although women-majority-owned SMEs are less likely to export directly compared to their men-majority-owned counterparts, women owners with an immigrant background have the potential to overcome network-related barriers, thus weakening the negative effect of gender on direct exporting. These results point to the significance of having access to international networks and the necessity to leverage this linkage to support the direct exporting approach for women-majority-owned SMEs. Our research guides SME owners and managers with global aspirations. We suggest policymakers develop initiatives to encourage women owners to identify, build, and cultivate international business relationships and improve the design and implementation of policies targeted at immigrant export businesses.

Using Hong Kong as a springboard: China’s indirect exports via Hong Kong in the 1950s

ABSTRACT Although Hong Kong’s entrepôt role in China’s foreign trade has long received scholarly attention, there is a relative paucity of studies on China’s indirect exports via Hong Kong in the Mao era (1949–1976). Using data from Chinese and Hong Kong trade statistics, this study estimates China’s indirect exports via Hong Kong in the 1950s and calculates their share in China’s export trade. The principal findings are threefold. First, their value, destination, and commodity composition changed markedly. Second, their share in China’s export trade declined during the decade, but the speed and extent of the decline varied by destination. In particular, their share in China’s exports to the non-Communist world initially increased from 1950 to 1952 and subsequently decreased. Third, their share in China’s exports to the non-Communist world was slightly higher in the 1950s than in the 1980s. These findings support recent historical studies indicating that Hong Kong played an essential role in selling Chinese goods to non-Communist countries during the early Mao era. Fundamentally, this study modifies the widely held view that Hong Kong’s entrepôt role in China’s foreign trade was much less important in the Mao era than in the post-1978 reform era.

Breaking Barriers, Building Businesses, and International Markets: Strategies of Female Innovators in the Chinese Market

In China, which in the past was dominated by state-owned and male-led ventures, female entrepreneurs are now increasingly popular. However, the specific pathways to internationalization for female-owned firms in China and their contribution to the country’s economic growth remain unexplored. Based on the principles of the resource-based approach, the article explores the innovative strategies used by Chinese female-owned firms to overcome resource constraints, formal and informal institutional barriers to business internationalization (entering the global markets through indirect exports). The article puts forward and empirically tests 5 sets of hypotheses according to which Chinese female-owned firms are: 1) more efficient in internationalization through indirect export strategies; 2) more inclined to digital innovation; 3) not focused on innovation conversion, but rather on successful adaptation of existing offerings for international markets or efficiency gains; 4) do not prioritize innovation in communication technologies, focusing more on innovation to reach customers, build relationships and enter international markets; 5) use the female business ecosystem to obtain safer pathways to innovation, such as external partnerships or adapting existing technologies, rather than focusing on investing internal R&D with elevated risk. Within each block, 2 additional hypotheses were put forward. They consider the impact of the relevant factor (digital innovation, innovation conversion, communication innovation, internal innovation) on indirect exports and its role in mediating the relationship between female ownership and the success of business internationalization. The study is based on a sample of 2,700 Chinese firms surveyed from November 2011 to March 2013 using the World Bank Enterprise Surveys China 2012 (a comprehensive recoding was performed, adhering to established practices in quantitative research). The control variables are the location of the respondent company in the capital/province, city size and firm size. The study used two types of factor analysis – Exploratory (EFA, including Promax rotation, oblique rotation method) and Confirmatory (CFA, Alpha Cronbach test, full path analysis model, including both direct and indirect effects, Monte Carlo method). SPSS 29 software was used for the data sample and AMOS 26.0 for the modeling process. A direct positive relationship was found between female ownership and indirect exports in China and digital ecosystem innovations, as well as between communication innovations and indirect exports. A significant negative direct relationship was found between female ownership and communication innovations, between digital ecosystem innovations and indirect exports, and between internal innovations on indirect exports. It also reveals the absence of a significant direct impact of innovation conversion on indirect exports. Mediating effects were also confirmed for communication and digital ecosystem innovations; partially for internal innovations; not confirmed for innovation conversion.

Total factor productivity in Kenyan manufacturing firms: The role of ISO certification and direct vs indirect export intensity

AbstractUsing the World Bank panel enterprise data for Kenya for the period 2007–2013–2018, we examined the role of ISO certification and export intensity in explaining the total factor productivity (TFP) of Kenyan manufacturing firms. Contrary to previous studies that largely focus on export propensity, this paper distinguished between the effects of direct and indirect export intensity. To address the endogeneity problem, we instrumented both direct and indirect export intensity variables with imported input supplies dummy. Further, we controlled for heterogeneity in our models by incorporating the year and industry fixed effects as well as the unobserved time‐varying firm characteristics. We found opposite effects of exporting on TFP. While direct export intensity significantly increased TFP, indirect export intensity significantly curtailed TFP. This suggested that direct exporters vis‐à‐vis indirect exporters were more likely to efficiently exploit the productive capacity of foreign technology and knowledge spillover effects that accrue from learning‐by‐exporting. Second, ISO certification significantly increased TFP for indirect exporting firms only denoting a stronger compensating effect for these intermediary‐dependent exporting enterprises. It also affirmed the need by manufacturing firms to attain Internationally Recognized Quality Certification standards. This will increase the competitiveness of their products, hence boosting their chances of breaking into the international markets.

Composition of the sinking particle flux in a hot spot of dinitrogen fixation revealed through polyacrylamide gel traps

Diazotrophs regulate marine productivity in the oligotrophic ocean by alleviating nitrogen limitation, contributing to particulate organic carbon (POC) export to the deep ocean. Yet, the characterization of particles composing the sinking POC flux has never been explored in such ecosystems. Moreover, the contribution of the direct gravitational export of diazotrophs to the overall flux is seldom assessed. Here we explore the composition of the sinking POC flux in a hot spot of N2 fixation (the western sub-tropical South Pacific) using polyacrylamide gel-filled traps deployed at two stations (S05M and S10M) and three depths (170 m, 270 m, 1000 m) during the TONGA expedition (November-December 2019). Image analyses of particles collected in the gels was used to classify them into 5 categories (fecal aggregates, phytodetrital aggregates, mixed aggregates, cylindrical fecal pellets, and zooplankton carcasses). Fecal aggregates were the most abundant at both stations and all depths and dominated the flux (average of 56 ± 28% of the POC flux), followed by zooplankton carcasses (24 ± 19%), cylindrical fecal pellets (15 ± 14%) and mixed aggregates (5 ± 4%), whereas phytodetrital aggregates contributed less (<1%). Since N isotope budgets show that export is mainly supported by diazotrophy at these stations, these results suggest that the diazotroph-derived N has been efficiently transferred to the foodweb up to zooplankton and fecal pellets before being exported, pleading for an indirect export of diazotrophy. However, random confocal microscopy examination performed on sinking particles revealed that diazotrophs were present in several categories of exported particles, suggesting that diazotrophs are also directly exported, with a potential contribution to overall POC fluxes increasing with depth. Our results provide the first characterization of particle categories composing the sinking flux and their contribution to the overall flux in a hot spot of N2 fixation.

Internationalization Strategy and Profitability of Nigerian Based Multinational Corporations

This research investigates how internationalization strategies relate to the profitability of multinational corporations (MNCs) within the Nigerian context. Utilizing a sample of 9 MNCs listed on the Nigerian Exchange Group (NGX) spanning an 12-year period (2011-2022), the study delves into the effects of internationalization strategies on key performance indicators. Secondary data from audited financial statements of these MNCs were collected for the years 2012 to 2022. Panel data models, incorporating indirect Export (IEX), direct export (DEX), and foreign ownership (FOW), were employed to assess the relationship between internationalization strategy and profitability. Descriptive statistics and panel regression techniques, including Ordinary Least Squares and Fixed Effects Models, were applied to estimate these relationships. The study specifically examined the revenue growth (REG), return on assets (ROA), and return on investment (ROI) as dependent variables, with IEX, DEX, and FOW as the independent variables. Its aim is to decode how internationalization strategies influence indirect export, direct export, and foreign ownership. The findings contribute to a nuanced understanding of the performance dynamics of MNCs operating in Nigeria, providing insights into how strategic decisions shape their overall performance.

STRATEGIES FOR ENTERING FOREIGN MARKETS BY DOMESTIC ENTERPRISES

The article examines topical issues of how Ukrainian enterprises can enter international markets, as well as the methods they can use to successfully enter the market. Global markets bring great challenges, but also new opportunities in the context of globalization and competitive environment. This article examines various approaches to entering foreign markets, such as exporting, investing in other countries, franchising, alliances, and others. Both the advantages and disadvantages of each of these methods are considered. In addition, advice is provided on how to select and use these methods. Attention is paid to the analysis of possible risks and problems that Ukrainian enterprises may face when entering foreign markets, and information is provided on how to minimize them. Managers and owners of Ukrainian enterprises who are considering the possibility of going outside their country and looking for ways to successfully enter foreign markets will find this article useful. This article describes the different types of exports, including direct and indirect exports, and considers the logistical and regulatory aspects that Ukrainian companies must manage. It emphasizes the importance of market research and conforming products and services to international standards. The article explores the collaborative strategies of franchising and forming alliances. It examines the role of partnerships and franchising agreements in mitigating risks and leveraging the strengths of local partners. Cultural nuances and market adaptation strategies are explored to help Ukrainian enterprises tailor their products, services, and marketing approaches to align with the cultural preferences and expectations of the target international markets. A critical aspect of the article focuses on the identification and analysis of potential risks involved in international market entry. It provides a framework for risk mitigation, emphasizing the importance of due diligence, legal compliance, and a proactive approach to addressing challenges.

Linking Spanish wine farmers to international markets: Is direct export better than indirect export in improving farm performance?

Selecting an appropriate export channel is one of farmers' most important strategic decisions as it determines farm performance. Although direct and indirect exports are two important channels linking farmers to international markets, little is known about whether direct export is better than indirect export in improving farm performance. This study addresses this research gap by analyzing the impact of export channel choice on wine export farm performance, utilizing data collected from 479 wine-exporting farmers from Spain. An inverse probability-weighted regression adjustment estimator addresses the selection bias issue of export channel choice. The results show that the wine export price received by the direct exporters is significantly lower than that received by the indirect exports. Using domestic intermediaries for exportation (i.e. indirect export) can reduce information asymmetry and transaction costs, which enable indirect wine exporters to sell their products at higher prices. However, there are no significant differences between direct and indirect exporters in export volume, value, diversity, and satisfaction. The findings highlight that direct and indirect exports do not generate differentiated profits, and wine farmers should choose one of them that can facilitate their access to international markets.

Exports, Irreversible Investments and Product Market Uncertainty: The Role of Trade Intermediaries

ABSTRACT This paper uses the theoretical underpinnings of the real options theory framework to investigate whether uncertainty affects a firms’ decision to directly export versus indirectly export and to determine whether indirect exports may offset the negative effects of uncertainty on export intensity. Using firm-level survey data of 40 emerging countries, we find that uncertainty and firms’ export intensity are negatively correlated. We also find that an increase in uncertainty increases a firms’ willingness to export through trade intermediaries. These results when considered holistically imply that trade intermediaries are able to countervail the negative effect of uncertainty on firms’ export intensity.

Exporting decision of agricultural firms: The role of foreign direct investment

AbstractIn this study, we examine how foreign direct investment affects agricultural firms' exporting decisions. We investigate this by using a Tobit model of export intensity, estimated on the sample of 104 Serbian agricultural firms observed in the period 2014–2017. In particular, we considered both direct and indirect export effects of foreign direct investment. The results indicate that foreign ownership positively affects firms' export intensity. Furthermore, we find that the effect is conditional on the origin of foreign capital, the strongest effects being associated with capital coming from bordering countries. Finally, the results show that the indirect effects of foreign direct investment on export are mainly negative. The results imply that agricultural firms which are a part of the system of multinational enterprises have lower costs of exporting, due to their reliance on international distribution networks and the information on foreign markets provided by the parent companies. In contrast, the costs of production for the local firms could be increased due to the intensive competition by the foreign affiliates. This means that foreign direct investment has the potential to improve the export performances of host‐country agricultural firms. However, to realize their full potential, a sufficient absorptive capacity of the local firms is required. [EconLit Citations: F21, F23, Q17].

Estrategia de internacionalización para la exportación sustentable de hortalizas a Estados Unidos caso de estudio: Clúster Hortaliceros Unidos de Sinaloa A.C.

Clusters are groups of companies from the same sector and located geographically close (Porter, 1998) that come together to survive in globalization and share risks to access new markets. In this document, the conventional export channels and the strategies implemented to achieve internationalization by the companies that make up the Cluster Hortaliceros Unidos de Sinaloa, A.C. were analyzed and identified. This analysis has the purpose of proposing the most appropriate internationalization strategy for the Cluster, in its incursion into the United States market, as well as identifying and analyzing the internationalization strategies currently implemented by the companies that comprise it and knowing the benefits that are they get by joining it. The applied methodology is a case study, with a qualitative approach, of descriptive scope and using the technological tool Atlas.ti 8, the main technique for data collection was the structured and unstructured directed interview, likewise to reinforce the investigation. A situational analysis was carried out through the elaboration of a SWOT matrix, it was possible to observe that the internationalization strategy implemented by the companies of the conglomerate is indirect export and the main barriers they face when exporting are quality standards, tariffs, sales on credit, the variation of international agricultural prices and the risks of non-payment.

Direct Versus Indirect Exports in Post-Communist Europe and Central Asia: The Role of Innovation Activities and Internationalization

ABSTRACT The distinction between direct and indirect exporting has been increasingly stressed in recent advances in the theory and empirics of international trade. In particular, the prior literature suggests a hierarchy of exporting decisions determined by firm productivity. We use firm-level data from a wide group of post-communist countries to investigate which characteristics of firms can explain their choice of export modes. We find that firm internationalization, firm size, and per worker revenue are linked to exporting decisions in a way consistent with Lu’s et al. model, while the relationship with innovation performance is more complex.

The effect of government support on Bureaucracy, COVID-19 resilience and export intensity: Evidence from North Africa

The literature on the imperativeness of government support for firm survival since the onset of COVID-19 is vast, but scholars have scarcely considered the impact of such assistance on managers’ time, nor the extent to which support measures induce resilience and export activity. Accordingly, this study assesses the impact of government support on (1) bureaucracy and (2) resilience using data from 535 Moroccan SMEs. It further evaluates the influence of resilience on direct versus indirect exports, and espouses the institutional voids, resource-based and strategy-creation view to explain the associations through a contingency lens. The results demonstrate that (1) government support increases bureaucracy which, (2) surprisingly triggers and enhances resilience. Furthermore, (3) resilience has a positive impact on direct exports but (4) adversely affects indirect exports. Theoretically, the findings acquiesce extant calls for measurement specificity in export performance. Practically, stakeholders’ attention is drawn to the value of managers’ time well spent.

Linking ambidextrous leadership and small and medium scale enterprises export performance

Purpose: This article focuses on the mediating role of innovation orientation and the moderating role of organisational trust (OT) on the relationship between ambidextrous leadership (AL) and export performance (EP). The need to highlight the drivers of AL and its influence on EP necessitated this study.Design/methodology/approach: The authors subjected sample data set from 420 respondents that engage in direct and indirect export activities to inferential analysis using partial least square (SEM).Findings/results: This study reveals that innovation orientation mediates AL and EP, as the direct link was not significant and organisation trust moderates the relationship.Practical implications: Leaders’ ambidexterity should incorporate a clearly defined orientation towards innovation that supports knowledge sharing and guides the need for innovative support while also ensuring that employees have high trust in the organisation.Originality/value: This study validates the leadership complexity theory and adds to EP literature on the relevance of innovation orientation and OT as good predictors of EP.

Air pollution-induced health impacts and health economic losses in China driven by US demand exports

Understanding how trade between regions or countries drives the transfer of air pollution has attracted considerable interest recently, but few studies have explored the various transfer pathways or evaluated economic losses due to the health impact of such air pollution. Here, we assess the air pollutant emissions and related health impacts and economic losses in China caused by export trade due to US demand by combining the linked multi-regional input-output (MRIO) model, GEOS-Chem model, integrated exposure-response model, and the willingness to pay method. We show that the air pollutant emissions embedded in China's export due to the US demand reached 5792.38 Kt in 2012 (2.48% of the total), which includes direct exports of intermediate (40.27%) and final (33.61%) products and indirect exports of intermediate products via domestic provinces (16.43%, domestic spillover) and other countries (9.69%, foreign spillover). The resulting increase in PM2.5 (<2.8 μg m−3) leads to additional 27,963 deaths in 30 provinces, with a higher death toll in coastal areas and the corresponding economic loss was higher in more developed regions and reached USD 2.08 billion. This study highlights the region-different air pollution and health impacts in China embedded in the US-demand trade, and provides a framework for the analysis of health and economic losses hidden in global trade, particularly between developing and developed countries.

Does firms and managerial experience matter for exporting? The case of selected EU member and non-member countries

PurposeThe main goal of this paper is to study empirically the importance of experience of top managers and firms for export performance, having controlled for a number of firm characteristics.Design/methodology/approachThe study is based on the probit model applied to the 2020 edition of the BEEPS firm level survey. The authors analyze firms in 15 EU member and 15 non-member countries.FindingsThe results indicate that firm experience can increase the probability of direct exporting, but is not significant for indirect exporting. The results also support the importance of interaction between experience of managers and experience of firms. The authors conclude that only the combination of managerial and firm experience can have a positive and significant effect for direct exporting. This relationship is more pronounced in the case of EU members.Research limitations/implicationsThe main limitations of our approach are related to data constraints. These include availability of only cross-sectional data and the limited number of individual characteristics of managers.Practical implicationsThe importance of experience for exporting suggests that firms can break into foreign markets by hiring more experienced managers.Social implicationsPost-communist countries can improve their export performance by hiring more experienced managers that would stimulate direct exports. Moreover, they can also export indirectly through intermediaries.Originality/valueIn contrast to previous studies, the authors used a model proposed by Jørgensen and Schroder (2008) in which the authors endogenized the costs of exporting by linking them to firm and managerial experience. Then, the authors validated empirically the importance of experience for firm export performance, having controlled for the set of individual firm characteristics.

The Interplay of E-commerce, Resilience and Exports in the Context of COVID-19

Scholars have extolled e-commerce as a pathway for sustaining firm operations in the unique circumstances of COVID-19. To add crisis time evidence to the body of work, and based on World Bank Enterprise Survey data, this inquiry interrogates 249 small manufacturing firms in Italy by examining the effect of e-commerce on (1) resilience, (2) direct exports and (3) indirect exports. The results show that while e-commerce has a positive impact on direct exports, a negative influence is recorded on indirect exports. Besides, e-commerce significantly increases resilience which, in turn, accelerates direct exports. However, resilience is found to have a trivial influence on indirect exporting. Furthermore, held as a constant, firm size demonstrates a significant and positive effect on direct and indirect exports. These fresh findings prompt implications for understanding the correlates of e-commerce, resilience and export behaviour. Practically, there are salient insights for stakeholders engaged in reviving small manufacturers’ exports for a speedy post COVID-19 recovery in Italy.

Optimal crop combination under soaring oil and energy prices in the kingdom of Saudi Arabia

There is a growing consensus that increasing costs of production, engendered by soaring oil and energy prices, have a negative effect on crop production, productivity, and efficiency. The oil and energy subsidy removal in the Kingdom of Saudi Arabia (KSA) necessitates conducting this study, which aimed to determine optimal cropping patterns under soaring oil and energy prices and to compute the comparative and competitive efficiencies of crop production. The study used combined analytical approaches, namely: linear programming (LP) and policy analysis matrix (PAM). It is perceived that crop production was highly profitable in the prevailing market and soaring oil and energy prices. However, the results of the optimal LP model reveal that returns from the cultivated crops in the study area surpassed the actual one by about four times. Furthermore, subsidy removal has reduced the total consumed amounts of energy and water constraints; however, the resources used are insufficient. On the other hand, all cultivated crops have shown high competitiveness with some crops gaining indirect export support. Thus, to achieve the maximum benefits of subsidy removal from the energy sector, the agricultural authority should adopt good extension programs to improve farmers’ knowledge and skill in the field of farm management practices and efficient use of the resources.