Firms' Export Dynamics: Experience vs. Size

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThis paper provides evidence about the impact that size and experience in exporting have on firms' dynamics, a critical input in models of firms dynamics. The analysis uses a census of French exports by firm-destination-product over the period 1994-2008 with a monthly frequency. We first uncover a large calendar year bias: the growth of exporters between the first and the second year of export is biased upwards because new exporters may start exporting late during the year. This incomplete calendar year reduces export revenue by 32% on average for the first year of export. We then show that, controlling for size, export experience is negatively related to net growth of exports for surviving exporters. Controlling for export experience, the relationship between average size and net growth of exports shows no systematic pattern. Finally, churning in foreign markets is decreasing with export experience and (sharply) with size.JEL classification: F14. Keywords: International trade, Firms' heterogeneity, Firms' dynamics, Churning.1 Non-technical summaryThis paper focuses on the sources of firms' performance in international markets. More precisely, it provides evidence about the role of exporters' size and experience for firms' growth, which are key variables in models of firms' dynamics. We investigate how these two variables affect the growth of exports, i.e. are young (small) exporters growing more rapidly than experienced (large) ones in international markets? As both experience and size are imperfectly correlated, i.e. small exporters may be new exporters or exporters about to stop exporting, they reveal different information that can affect the dynamics of firms in international markets. We therefore consider them jointly in our estimations.Existing international trade models have emphasized the importance of firm heterogeneity in explaining the cross-sectional distribution of firm size in domestic and foreign markets. Sales and exports are extremely concentrated among a limited number of very large firms, whereas a large number of small exporters ship one product to a single destination. This size distribution of exporters is influenced by the process of entry and exit, as new exporters tend to be small, grow fast but have a low rate of survival. Understanding the relative contribution of experience and size in firms' performance is central to the explanation and modeling of firms' dynamics in domestic or...

Learning, Prices, and Firm Dynamics

“…Drawing on detailed trade and production data from the Portuguese manufacturing sector, we document that: (1) firms with longer spells of activity in export destinations tend to ship larger quantities at lower prices; (2) more experienced exporters tend to use more expensive inputs; and (3) input prices and quantities tend to increase with revenue growth within firms. In line with prior research, we also find that the positive relationship between export revenue and market experience reflects growth, not just market selection based on initial size; and that revenue growth within destinations (conditional on initial size) tends to decline with the length of activity there (Eaton et al, 2008;Berthou and Vicard, 2013;Ruhl and Willis, 2014).…”

Demand Learning and Firm Dynamics: Evidence from Exporters

“…Over the period, the firmmarket specific beliefs have been characterized by a slightly positive growth. 18 18 Note that the 'calendar year effect' pointed out by Berthou and Vicard (2014) and Bernard et al (2014) is likely to bias upwards the growth rate between the first and second years, because of the potential incompleteness of the first year of export measured over the calendar year. When measuring age by bins as in our estimations, the dummy for year two gets rid of the average bias.…”

Exporter Dynamics, Firm Size and Growth, and Partial Year Effects

“…23 This is twice as large as the size correction reported for new French exporters by Berthou and Vicard (2013). 24 The patterns in other destinations market are largely unchanged.…”