Small, young, and exporters: New evidence on the determinants of firm growth

Abstract

This work investigates how the export status of the firm influences the patterns of growth at different age classes. We address this research question resorting to a novel set of data that links together the universe of Italian firms and detailed data on export transactions. We find that the positive relationship between export status and growth declines with firm age. Further, we also find that, even when accounting for the role of age, the negative size-growth relationship does not disappear, contrary to some recent evidence. These results, which are robust to a series of controls, suggest for a positive signaling role of the export status which is stronger for young exporters or born globals. Exploiting the product-country level dimension of the customs data we also provide, for the first time, evidence on differences in exchange rates pass through between young and experienced exporters. In particular, we find that early exporters appear to be well equipped to face exchange rates variations as their exports decrease less following a currency appreciation.

Family Female Executives and Firm Financial Performance

“…It is used to control its level of experience and accumulated resources, usually the result of a long process [59]. Regarding the exporting activity, Grazzi and Moschella [60] stated that young firms are more adaptable and less affected by currency fluctuations; they also suffer less organisational rigidity. Thus, Age was expected to have a negative influence on firm performance.…”

Firm Size and Age mediating the Firm Survival-Hedging Effect: Hayes’ 3-Way Parallel Approach

“…Firms may hedge consciously in consonance with the ALT, or unconsciously, as assumed by the PLT, but we argue that absolute disregard of hedging may not augur well for these manufacturing firms, irrespective of their size [47,48]. The presumption that a firm is too small to hedge is preposterous, because the commodities which that firm produces are sold in the same market where other imported commodities are sold, and for bigger firms that may be export-oriented, the commodities which they export are also being sold in foreign markets with much more hedging-conscious firms to the detriment of the non-hedgers, impeding their life-cycle [49][50][51].…”

“…These challenges, coupled with globalization, have prompted firms to compete at a global level [56,57]. As such, import-based firms, export-based firms or firms in both orientations constantly seek to minimize costs at all levels of their operational processes, so as to remain competitive [51,58]. Costs associated with transactions, translations and economic exposure constitute risks to firms.…”

“…A firm's size is defined by both financial and nonfinancial measures, such as profit and employee numbers respectively [19,[77][78][79]. On the other hand, the age of a firm as a mediator is operationalized as how long a firm has been in active business engagement [30,51,80]. In this regard, most studies have conceptualized the ages of firms by a categorization into either young or old firms [4,5].…”

“…As a second mediator, the firms' age is the length of the period a firm is engaged in actual business operations [80]. This could be defined as operations bordering on fiscal responsibilities and administrative engagements [51,79]. These proposed mediators are also expected to intervene between the predictor and outcome variables that basically should have a direct effect.…”