Supply chains and the internationalization of small firms

Abstract

This paper explores the relation between supply-chain participation and the internationalization of firms. We show that even small and less productive firms, if involved in production chains, can take advantage of reduced costs of entry and economies of scale that enhance their probability of exporting. The empirical analysis is carried out on an original database, obtained by merging and matching balance-sheet data with data from a survey on over 25,000 Italian firms, which include direct information on the involvement in supply chains. We find a positive and significant relation between being part of a supply chain and the probability of exporting, as well as the intensive margin of trade. The number of foreign markets served (the extensive margin), on the other hand, does not seem to be affected. We also investigate whether being in different positions along the chain, i.e., upstream or downstream, matters, and we find that downstream producers tend to benefit more. Our results are robust to different specifications, estimation methods, and the inclusion of the control variables typically used in heterogeneous firms models

Global value chains: New evidence for North Africa

“…Indeed, each country can better exploit its comparative advantage niches, with possible bene…ts from economies of scale. Existing evidence on di¤erent countries shows that entering a GVC can result in increased productivity (Antràs and Yeaple, 2014;Giovannetti et al, 2015). To the extent that this is true, a major question becomes how can participation into a value chain be incentivized, in order to enhance competitiveness.…”

The Role of Trade Policies in Building Regional Value Chains – Some Preliminary Evidence From Africa

“…Integration into value chains promises to boost economic development through knowledge spillovers, economies of scale and technological progress (Giovannetti et al, 2015 andYeaple, 2015). With that, Kummritz (2016) also shows that value chain participation positively affects domestic value added and productivity.…”

Exit from Exporting: Does Being a Two-way Trader Matter?

“…Some of them focus on the impact of foreign intermediate inputs on the probability of exporting (Sjöholm and Takii, 2008;Aristei et al, 2013;Lo Turco and Maggioni, 2013;Giovannetti et al, 2013;Meinen, 2015) and others on export volume and export scope (Bas and StraussKahn, 2014;Bertrand, 2011;Feng et al, 2012;Navas et al, 2013). 4 To the best of our knowledge, this is the first study that is focused on the impact of being an importer of intermediate inputs on the probability that a firm will cease exporting, which is our main contribution to this strand of literature.…”

“…We expect that impact is even greater for small firms. A common finding in prior empirical research is that entry and survival in foreign markets for these firms is limited by higher entry costs faced because of their smaller size (OECD, 2013;Giovannetti et al, 2013). Small firms that manage to join these networks can overcome some of the limitations related to their size by benefiting from processes of technology transfer, marketing and distribution networks designed by leading firms, better _________________________ 4 Another approach is adopted by Wagner (2013) and Wagner and Weche (2014), who investigate the relationship between firm survival and two-way trading.…”