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Failure of exporting and non-exporting firms: do the financial predictors vary?

Oliver Lukason (School of Economics and Business Administration, University of Tartu, Tartu, Estonia)
Erkki K. Laitinen (Department of Accounting and Finance, University of Vaasa, Vaasa, Finland)

Review of International Business and Strategy

ISSN: 2059-6014

Article publication date: 18 October 2018

Issue publication date: 26 November 2018

Abstract

Purpose

The purpose of this paper is to find out whether the financial predictors of failure differ for exporting and non-exporting firms.

Design

The study is based on two samples of French manufacturing micro firms from Amadeus database. Samples of 468 exporting and 1,148 non-exporting firms were divided equally to survived and bankrupted firms. Logistic regression method was used with five financial ratios portraying liquidity, solidity, cash flow sufficiency, profitability and productivity.

Findings

The findings suggest that cash flow sufficiency and solidity were important predictors in both firm groups, although the latter was more important in case of exporters. Liquidity was important in case of non-exporters, while profitability in case of exporters. Productivity was not a significant predictor. With these variables, failure of exporters was predicted with a higher accuracy.

Originality

This paper contributes to an under-researched area in the failure prediction and international business literature, namely, it outlines whether failure predictors are the same for similar exporting and non-exporting firms. The results indicate that some predictors differ and similar ones can have different importance for exporters and non-exporters.

Keywords

Acknowledgements

We acknowledge financial support from Estonian Research Council grant PUT1003 “A holistic process perspective of export patterns: theory development and empirical evidence” and Estonian Ministry of Education and Research grant IUT20-49 “Structural Change as the Factor of Productivity Growth in the Case of Catching up Economies”. Authors thank Tiia Vissak, anonymous reviewer and journal editors for useful comments.

Citation

Lukason, O. and Laitinen, E.K. (2018), "Failure of exporting and non-exporting firms: do the financial predictors vary?", Review of International Business and Strategy, Vol. 28 No. 3/4, pp. 317-330. https://doi.org/10.1108/RIBS-02-2018-0015

Publisher

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Emerald Publishing Limited

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