Firm strategies in expanding and diversifying exports

Abstract

This paper provides novel empirical evidence on the patterns and dynamics of exports by Irish firms over the past two decades from a highly detailed data set of export records at the firm‐product‐destination level. We identify patterns of export concentration and specialisation and how these evolved over time. Firms’ strategies for export growth along product and destination markets mixes are then examined and the contributions of intensive (average sales) and extensive (number of products or markets) margins to overall exports and to export growth are calculated. We find that most exporting firms are quite small, selling a few products to a small number of destinations while export values are dominated by a relatively small group of highly globalised large firms selling many products to many destinations. Continuing exporters frequently introduce new products, drop products and enter and exit markets. Export growth in the case of Irish‐owned exporters appears largely driven by the extensive margin of product and destination changes. However, the opposite pattern holds for foreign‐owned firms with growth mainly coming from the intensive margin.

Previous experience, experimentation and export survival: Evidence from firm‐product‐destination level data

“…Yet, we obtain that adding a new product to a core destination of an exporter endures a higher hazard. This is consistent with Lawless et al (2019a) argument that an exporter may enlarge her export portfolio by adding products that are likely to be less closely aligned to that firm's core competencies to their known markets, which may lead to lower survival rates. Moreover, the firm's total sales to that destination at the onset of the product‐destination being analysed significantly reduces the hazard rate.…”

Durability of Zambia’s Agricultural Exports

“…The extensive margin assesses export growth that arises from trading in new markets and new products, while the intensive margin evaluates export growth from trading in existing markets and products. Trade margins are related to export duration as they both assess the channels of export growth; however, trade margins illustrate the static part of export growth, while export duration explains the dynamic part [19].…”

Export margins and survival: A firm‐level analysis using Kenyan data

“…However, these firms constitute at least 92% of Portugal's total export value (Amador & Opromolla, 2013). This also holds for Ireland, where 96% of export value is from multi‐product and multi‐destination firms (Lawless et al, 2019). Discussions have also centred around firm and product dynamics and factors such as entry, exit and continuation (Amador & Opromolla, 2013; Cebeci & Fernandes, 2015; Creusen et al, 2011; Lawless et al, 2019; Lejour, 2015).…”

“…The table's first section presents the share of firms in terms of the total number of exports for their respective category, revealing that 43% of Kenyan firms are continuing exporters, followed by single‐year exporters (29%), entering firms (15%) and exiting firms (13%). The proportion of continuing exporters is substantially lower than in Portugal, Ireland and Turkey, where at least two thirds of firms are continuing exporters (Amador & Opromolla, 2013; Cebeci & Fernandes, 2015; Lawless et al, 2019). However, it is also apparent that the number of continuing exporters has significantly declined in Kenya, especially after 2013, and the number of single‐year exporters has increased.…”