Firm heterogeneity and exports in the Netherlands: Identifying export potential beyond firm productivity

Abstract

According to the Melitz [2003. 'The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity.' Econometrica 71: 1695-1725] model, potential exporters have to be sufficiently productive to overcome the entry costs of foreign markets. Once firms pass this productivity threshold, they all export. However, empirical evidence indicates that a substantial share of highly productive top-performing firms does not export. In this paper, we focus specifically on this group of high-performing non-exporters and identify the factors that prevent them from successfully exporting. We employ a large Dutch administrative dataset containing both small and large firms in services and manufacturing for the period 2010-2016. Our main findings are twofold. First, controlling for high productivity identifies other factors that need to be fulfilled for exporting firms. Firm size, import status, and foreign ownership are important determinants of a firm's future export activity. Second, firm location is crucial. A location in more peripheral areas increases the probability that high-productive firms do not export, whereas a location close to the border increases export probabilities.

The role of firm location and agglomeration economies on export propensity: the case of Portuguese SMEs

“…Relative to the second proxy used to measure the determinant location, we followed the study of Brakman et al (2019) and opted for the distance to the border, given that Portugal has border with a single country, Spain, which absorbed, in 2013, about a quarter of Portuguese exports of goods. Considering that the shorter the distance to the border [7], the lower the transportation costs, we anticipate that firms located in districts further from the border are less likely to export.…”

“…Concerning agglomeration, and similarly to most studies summarized in Table 1, we include urbanization and specialization economies and export spillovers. Like Brakman et al (2019), we measure urbanization through the general density of firms, obtained by the number of firms per km 2 in the same NUTS3 region. This variable intends to capture knowledge spillovers in general, so a positive relationship is expected between this variable and firm's export propensity.…”

“…Note that in all the studies export propensity plays the role of dependent variable, although some studies (Zhao and Zou, 2002;van Beers and van der Panne, 2011;Mukin, 2012;Rodr ıguez-Pose et al, 2013) also analyze the export intensity. Furthermore, in almost all studies the sample is composed of manufacturing firms (the exceptions are Farole and Winker (2013) and Brakman et al (2019) that also include firms from the services sector).…”

“…Relative to the results for the variable distance to the border, these are according to what we expected. Like Brakman et al (2019) the negative coefficient for this variable indicates that firms that are farther from the border are less prone to export. According to the geography (border with a single country) and the profile of the transports used in Portuguese exports (as mentioned above, about 40% of Portuguese exports are carried out by land-road and rail transport), and still considering the level of significance of the estimates, we concluded that the distance of the SMEs to the border plays a relevant role in the export propensity.…”

Firms’ Export Performance: A Fractional Econometric Approach

“…Onkelinx et al (2016) argue that labour productivity and investments in human capital are crucial to Small and Medium-sized Enterprises (SMEs) internationalization success. Brakman et al (2019) mentioned the importance of productivity and internal characteristics regarding the decision to export. Lopez-Rodriguez et al (2018) also state that advanced training and skilled workers can improve firms' export performance.…”