Abstract
This paper investigates how firm size and global sourcing affect the export surviving probabilities. By using data on export and import transactions disaggregated by destination/origin for the entire Danish manufacturing firms between the period 1995–2006, the author is able to classify the firms into different size categories and to observe whether they continue or cease to export. Moreover, he is able to define whether the firms source intermediate inputs from high- or low-wage counties. The results, after controlling for the endogeneity of the international sourcing decision by using instrument variable and propensity score matching, indicate that firm size is positively correlated with the likelihood of continuing to export. Moreover, for small and medium size firms, global sourcing seems also to increase the probability of staying in the export market but only if they source from high-wage countries. However, sourcing inputs from abroad, no matter if it is from high- or low-wage countries, do not seem to significantly affect the export surviving probabilities for larger firms.
References
Abraham, K.G., and Taylor, S.K. (1996). Firms’ use of outside contractors: Theory and evidence. Journal of Labour Economics 14(3): 394–424. https://doi.org/10.1086/20981610.1086/209816Search in Google Scholar
Agrawal, V., and Farrell, D. (2003). Who wins in offshoring? The McKinsey Quarterly 4: 36–41Search in Google Scholar
Albornoz, F., Pardo, H.F.C. Corcos, G., and Ornelas, E. (2012). Sequential exporting. Journal of International Economics 88(1): 17–31. https://doi.org/10.1016/j.jinteco.2012.02.00710.1016/j.jinteco.2012.02.007Search in Google Scholar
Baldwin, R., and Krugman, P.. (1989). Persistent trade effects of large exchange rate shocks. Quarterly Journal of Economics 104(4): 635–654. https://ideas.repec.org/a/oup/qjecon/v104y1989i4p635-654..html10.2307/2937860Search in Google Scholar
Bandick, R. (2016). Offshoring, plant survival and employment growth. The World Economy 39(5): 597–620. https://doi.org/10.1111/twec.1231610.1111/twec.12316Search in Google Scholar
Bandick, R., and Görg, H. (2010). Foreign acquisition, plant survival and employment growth. Canadian Journal of Economics 43(2): 547–73. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-5982.2010.01583.x10.1111/j.1540-5982.2010.01583.xSearch in Google Scholar
Beck, T., Demirguc-Kunt, A., Laeven, L., and Levine, R. (2008). Finance, firm size, and growth. Journal of Money, Credit and Banking 40(8): 1379–1405. https://doi.org/10.1111/j.1538-4616.2008.00164.x10.1111/j.1538-4616.2008.00164.xSearch in Google Scholar
Becker, S., and Ichino, A. (2002). Estimation of average treatment effects based on propensity score. The Stata Journal 2(4): 358–377. https://doi.org/10.1177/1536867X020020040310.1177/1536867X0200200403Search in Google Scholar
Bernard, A., and Jensen, B. (1999). Exceptional exporter performance: Cause, effect, or both? Journal of International Economics 47(1): 1–25. https://ideas.repec.org/a/eee/inecon/v47y1999i1p1-25.htmlSearch in Google Scholar
Bernard, A.B., Eaton, J., Jensen, J.B., and Kortum, S. (2003). Plants and productivity in international trade. American Economic Review 93(4): 1268–1290. https://www.aeaweb.org/articles?id=10.1257/00028280376920629610.1257/000282803769206296Search in Google Scholar
Bernard, A.B., Redding, S., and Schott, P. (2007). Comparative advantage and heterogeneous firms. Review of Economic Studies 74(1): 31–66. https://ideas.repec.org/a/oup/restud/v74y2007i1p31-66.html10.1111/j.1467-937X.2007.00413.xSearch in Google Scholar
Bertrand, O. (2011). What goes around, comes around: Effects of offshore outsourcing on the export performance of firms. Journal of International Business Studies 42(2): 334–344. https://ideas.repec.org/a/pal/jintbs/v42y2011i2p334-344.html10.1057/jibs.2010.26Search in Google Scholar
Besedes, T. and Prusa T. (2011). The role of extensive and intensive margins and export growth. Journal of Development Economics 96(2): 371–379 https://doi.org/10.1016/j.jdeveco.2010.08.01310.1016/j.jdeveco.2010.08.013Search in Google Scholar
Carrére, C., and Strauss-Kahn, V. (2017). Export survival and the dynamics of experience. Review of World Economics 153(2): 271–300. https://ideas.repec.org/a/spr/weltar/v153y2017i2d10.1007_s10290-017-0277-1.html10.1007/s10290-017-0277-1Search in Google Scholar
Choquette, E. (2019). Import-based market experience and firms′ exit from export markets. Journal of International Business Studies 50(3): 423–449. https://ideas.repec.org/a/pal/jintbs/v50y2019i3d10.1057_s41267-018-0193-1.html10.1057/s41267-018-0193-1Search in Google Scholar
Conyon, M.J., Girma, S., Thompson, S., and Wright, P.W. (2002). The impact of foreign acquisition on wages and productivity in the United Kingdom. Journal of Industrial Economics 50(1): 85–102. https://doi.org/10.1111/1467-6451.0016910.1111/1467-6451.00169Search in Google Scholar
Córcoles, D., Díaz-Mora, C., and Gandoy, R. (2019). Complex internationalization strategies and firm export performance during the Great Trade Collapse. Journal of Economic Studies 46(2): 246–265. https://doi.org/10.1108/JES-06-2017-014410.1108/JES-06-2017-0144Search in Google Scholar
Creusen, H., and Lejour, A. (2011). Uncertainty and the export decisions of Dutch firms, CPB Discussion Paper No. 183, CPB Netherlands Bureau for Economic Policy Analysis. https://econpapers.repec.org/paper/wsrwpaper/y_3a2011_3ai_3a069.htmSearch in Google Scholar
De Lucio, J., Mínguez, R., Minondo, A., and Requena, F. (2019). New exporters benefit more from information spillovers. Applied Economics Letters. https://doi.org/10.1080/13504851.2019.169870910.1080/13504851.2019.1698709Search in Google Scholar
Diaz-Mora, C., Córcoles, D., and Gandoy, R. (2015). Exit from exporting: Does being a two-way trader matter? Economics: The Open-Access, Open-Assessment E-Journal 9 (2015-20), 1–27. http://dx.doi.org/10.5018/economics-ejournal.ja.2015-2010.5018/economics-ejournal.ja.2015-20Search in Google Scholar
Dibbern, J. Winkler, J., and Heinzl, A. (2008). Explaining variations in client extra costs between software projects offshored to India. MIS Quarterly 32(2): 333–366.Search in Google Scholar
Doh, J.P. (2005). Offshoring outsourcing: Implications for international business and strategic management theory and practice. Journal of Management Studies 42(3): 695–704. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-6486.2005.00515.x10.1111/j.1467-6486.2005.00515.xSearch in Google Scholar
Eaton, J., Eslava, M., Kugler, M., and Tybout, J. (2007). Export dynamics in Colombia: Firm-level evidence. NBER Working Paper 13531. https://www.nber.org/papers/w13531Search in Google Scholar
Farrell, D. (2005). Value creation through economic change. Journal of Management Studies 42(3): 675–683 https://doi.org/10.1111/j.1467-6486.2005.00513.x10.1111/j.1467-6486.2005.00513.xSearch in Google Scholar
Feenstra, R.C., and Hanson, G.H. (1999). The impact of outsourcing and high-technology capital on wages: Estimates for the United States, 1979–1990. Quarterly Journal of Economics 114(3): 907–940. https://doi.org/10.1162/00335539955617910.1162/003355399556179Search in Google Scholar
Fernandes, A.P., and Tang, H. (2014). Learning to export from neighbors. Journal of International Economics 94(1): 67–84. https://doi.org/10.1016/j.jinteco.2014.06.00310.1016/j.jinteco.2014.06.003Search in Google Scholar
Girma, S., Greenaway, D., and Kneller, R. (2004). Does exporting lead to better performance? A microeconometric analysis of matched firms. Review of International Economics 12: 855–866. https://doi.org/10.1111/j.1467-9396.2004.00486.x10.1111/j.1467-9396.2004.00486.xSearch in Google Scholar
Grant, R. (1991). The resource-based theory of competitive advantage: Implications for strategy formulation. California Management Review 33(3): 114–135. https://doi.org/10.2307/4116666410.2307/41166664Search in Google Scholar
Greenaway, D., and Kneller, R. (2007). Industry differences in the effect of export market entry: Learning by exporting? Review of World Economics 143(3): 416–432. https://ideas.repec.org/a/spr/weltar/v143y2007i3p416-432.htmlSearch in Google Scholar
Gullstrand, J., and Persson, M. (2015). How to combine high sunk costs of exporting and low export survival. Review of World Economics, 151(1): 23–51. https://ideas.repec.org/a/spr/weltar/v151y2015i1p23-51.html10.1007/s10290-014-0204-7Search in Google Scholar
Görg, H., Hanley, A., and Strobl, E. (2008). Productivity effects of international outsourcing: Evidence from plant-level data. Canadian Journal of Economics 41(2): 670–688. https://econpapers.repec.org/article/cjeissued/v_3a41_3ay_3a2008_3ai_3a2_3ap_3a670-688.htm10.1111/j.1540-5982.2008.00481.xSearch in Google Scholar
Heckman, J.J. (1978). Dummy endogenous variables in a simultaneous equation system. Econometrica 46(4): 931–959. https://ideas.repec.org/a/ecm/emetrp/v46y1978i4p931-59.html10.2307/1909757Search in Google Scholar
Heinrich, C., Maffioli, A., and Vazquez, G. (2010). A primer for applying propensity-score matching. Technical Note IDB-TN-161, Inter-American Development Bank. https://publications.iadb.org/en/primer-applying-propensity-score-matchingSearch in Google Scholar
Hujer, R., Maurer, K., and Wellner, M. (1999). Estimating the effect of vocational training on unemployment duration in West Germany – A discrete hazard-rate model with instrumental variables. Jahrbücher für Nationalökonomie und Statistik 218: 619–646. https://ideas.repec.org/p/wpa/wuwpem/9704001.html10.1515/jbnst-1999-5-606Search in Google Scholar
Hummels, D., Jørgensen, R., Munch, J., and Xiang, C. (2014). The wage effects of offshoring: Evidence from Danish matched worker-firm data. American Economic Review 104(6): 1597–1629. https://www.aeaweb.org/articles?id=10.1257/aer.104.6.159710.1257/aer.104.6.1597Search in Google Scholar
Ilmakunnas, P., and Nurmi, S. (2010). Dynamics of export and market entry and exit. The Scandinavian Journal of Economics 112(1): 101–126. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-9442.2009.01596.x10.1111/j.1467-9442.2009.01596.xSearch in Google Scholar
Jabbour, L. (2010). Offshoring and firm performance: Evidence from French manufacturing industry. The World Economy 33(3): 507–524. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-9701.2010.01265.x10.1111/j.1467-9701.2010.01265.xSearch in Google Scholar
Larsen, M., Manning, S., and Pedersen, T. (2013). Uncovering the hidden costs of offshoring: The interplay of complexity, organizational design, and experience. Strategic Management Journal, 34(5): 533–552. https://onlinelibrary.wiley.com/doi/abs/10.1002/smj.202310.1002/smj.2023Search in Google Scholar
Levinsohn, J., and Petrin, A. (2003). Estimating production functions using inputs to control for Unobservables. Review of Economic Studies 70(2): 317–41. https://doi.org/10.1111/1467-937X.0024610.1111/1467-937X.00246Search in Google Scholar
Leuven, E., and Sianesi, B. (2003). PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing. Available at http://ideas.repec.org/c/boc/bocode/s432001.htmlSearch in Google Scholar
Li, H., Yi, X., and Cui, G. (2017). Emerging market firms’ internationalization: How do firms’ inward activities affect their outward activities? Strategic Management Journal 38(13): 2704–2725. https://onlinelibrary.wiley.com/doi/abs/10.1002/smj.2679Search in Google Scholar
Lo Turco, A., and Maggioni, D. (2013). On the role of imports in enhancing manufacturing exports. The World Economy 36(1): 93–120. https://onlinelibrary.wiley.com/doi/abs/10.1111/twec.1202010.1111/twec.12020Search in Google Scholar
Manning, S., Larsen, M.M., and Bharati, P. (2015). Global delivery models: The role of talent, speed and time zones in the global outsourcing industry. Journal of International Business Studies 46(7): 850–877. https://ideas.repec.org/a/pal/jintbs/v46y2015i7p850-877.html10.1057/jibs.2015.14Search in Google Scholar
Massini, S., Perm-Ajchariyawong, N., and Lewin, A.Y. (2010). Role of corporate-wide offshoring strategy on offshoring drivers, risks and performance. Industry and Innovation 17(4): 337–371. https://ideas.repec.org/a/taf/indinn/v17y2010i4p337-371.html10.1080/13662716.2010.496242Search in Google Scholar
McGuckin, R.H., and Nguyen, S.V. (2001). The impact of ownership changes: A view from labour markets. International Journal of Industrial Organization 19(5): 739–762. https://www.sciencedirect.com/science/article/pii/S016771870000092810.1016/S0167-7187(00)00092-8Search in Google Scholar
Melitz, M.J. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71(6): 1695–1725. https://onlinelibrary.wiley.com/doi/10.1111/1468-0262.0046710.1111/1468-0262.00467Search in Google Scholar
Muûls, M., and Pisu, M. (2009). Imports and exports at the level of the firm: Evidence from Belgium. The World Economy 32(5): 692–734. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-9701.2009.01172.x10.1111/j.1467-9701.2009.01172.xSearch in Google Scholar
Naghavi, A., and Ottaviano, G.I.P. (2009). Offshoring and product innovation. Economic Theory 38(3): 517–532. https://ideas.repec.org/a/spr/joecth/v38y2009i3p517-532.html10.1007/s00199-007-0322-8Search in Google Scholar
Nguyen, D.X. (2012). Demand uncertainty: Exporting delays and exporting failures. Journal of International Economics 86(2): 336–344. https://ideas.repec.org/a/eee/inecon/v86y2012i2p336-344.html10.1016/j.jinteco.2011.10.007Search in Google Scholar
Onkelinx, J., and Sleuwaegen, L. (2010). Internationalization strategy and performance of small and medium sized enterprises. National Bank of Belgium Working Paper No. 197. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=169258310.2139/ssrn.1692583Search in Google Scholar
Roberts, M.J., and Tybout, J.R. (1997). The decision to export in Colombia: An empirical model of entry with sunk costs. American Economic Review 87(4): 545–565. https://ideas.repec.org/a/aea/aecrev/v87y1997i4p545-64.htmlSearch in Google Scholar
Sethupathy, G. (2013). Offshoring, wages, and employment: Theory and evidence. European Economic Review 62: 73–97. https://www.sciencedirect.com/science/article/pii/S001429211300053610.1016/j.euroecorev.2013.04.004Search in Google Scholar
Sjöholm, F. (2003). Which Indonesian firms export? The importance of foreign networks. Papers in Regional Science 82(3): 333–350. https://ideas.repec.org/a/spr/ecogov/v82y2003i3p333-350.html10.1007/s10110-003-0163-1Search in Google Scholar
Smith, J., and Todd, P. (2005). Rejoinder. Journal of Econometrics 125(1–2): 365–375. https://ideas.repec.org/a/eee/econom/v125y2005i1-2p365-375.html10.1016/j.jeconom.2004.04.013Search in Google Scholar
Stirbat, L., Record, R., and Nghardsaysone, K. (2015). The experience of survival: Determinants of export survival in Lao PDR. World Development 76: 82–94. https://www.sciencedirect.com/science/article/abs/pii/S0305750X1500149710.1016/j.worlddev.2015.06.007Search in Google Scholar
Vella, F., and Verbeek, M. (1999). Estimating and interpreting models with endogenous treatment effects. Journal of Business and Economic Statistics 17(4): 473–478. https://ideas.repec.org/a/bes/jnlbes/v17y1999i4p473-78.htmlSearch in Google Scholar
Volpe, C., and Carballo, J. (2009). Survival of new exporters: Does it matter how they diversify? IDB Working Paper Series IDB-WP-140.Search in Google Scholar
Wagner, J. (2007). Exports and productivity: A survey of the evidence. The World Economy 30(1): 60–82. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-9701.2007.00872.x10.1111/j.1467-9701.2007.00872.xSearch in Google Scholar
Wagner, J. (2011). Offshoring and firm performance: Self-selection, effects on performance, or both? Review of World Economics 147(2): 217–247. https://www.iza.org/publications/dp/4605/offshoring-and-firm-performance-self-selection-effectson-performance-or-both10.1007/s10290-010-0078-2Search in Google Scholar
© 2020 Roger Bandick, published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 International License.