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Article
Publication date: 13 February 2019

Edward Bbaale, Ibrahim Mike Okumu and Suzan Namirembe Kavuma

The purpose of this paper is to estimate both direct and indirect channels through which imported inputs spur exporting in the African manufacturing sector.

Abstract

Purpose

The purpose of this paper is to estimate both direct and indirect channels through which imported inputs spur exporting in the African manufacturing sector.

Design/methodology/approach

The authors estimated models for all exporters, direct exporters and indirect exporters using a probit model. The authors circumvented the endogeneity of imported inputs and productivity in the export status models by using their lagged values. The authors employed the World Bank Enterprise Survey data for a set of 26 African countries.

Findings

From the direct channel, the authors find that importers of inputs in the previous period increase the probability of exporting in the current period pointing to the possibility of sunk cost complementarities. Indirectly, high lagged firm productivity spurs exporting in the current period. Being a direct importer of inputs in the previous period increases the probability of exporting directly but has no effect on indirect exporters. Both channels are complimentary because their interaction term is positive and significant.

Practical implications

The importation of inputs seems a precondition for exporting and that any policy obscuring imports may indirectly inhibit exportation. Government policy should make importation inputs easier in order to stimulate exporting activities.

Originality/value

The paper’s contribution to empirical literature is that much of the empirical studies have overly concentrated on developed countries and hence leaving a huge knowledge gap for African countries. The only papers focusing on Africa are by Parra and Martínez-Zarzoso (2015), who focused on the Egyptian manufacturing sector, and Edwards et al. (2017), who used firm-level data from South Africa. The authors extend this literature by undertaking firm-level analysis in a cross-country setting among manufacturing firms in Africa.

Details

World Journal of Entrepreneurship, Management and Sustainable Development, vol. 15 no. 1
Type: Research Article
ISSN: 2042-5961

Keywords

Article
Publication date: 9 October 2023

Puneet Kumar Arora and Jaydeep Mukherjee

This study aims to add to the growing literature on the trade–finance nexus by exploring the interplay between a country's level of financial development, the external finance…

Abstract

Purpose

This study aims to add to the growing literature on the trade–finance nexus by exploring the interplay between a country's level of financial development, the external finance dependence of firms and their exporting decisions.

Design/methodology/approach

The study first develops a theoretical model to motivate the idea that a firm's liquidity (financial) position and its home country's level of financial development act as substitute factors in its export market entry decisions. It then empirically tests whether an improvement in a country's financial development level enhances the number of entrants in the foreign markets and boosts the exports of incumbent exporters using firm-level data of manufacturing firms in India for the period 1993–2020.

Findings

Empirical results suggest that a higher level of financial development helps increase the exporting probability of firms that rely more on external finance for their operations. Further, the study finds that the sunk costs-induced hysteresis effect plays a major role in firms' exporting decisions and financial factors don't play a significant role in the exporting activities of incumbent exporters.

Practical implications

The findings suggest that a well-developed financial market is necessary to help more and more firms initiate their foreign market operations. The results underscore that trade-liberalisation measures alone may not increase India's exports and the government must complement them with financial sector reforms.

Originality/value

Studies highlighting the role of financial sector development in helping financially-constrained Indian firms overcome the entry barriers associated with exporting are extremely limited. This study contributes to this nascent literature by conducting an empirical investigation on an extensive database of Indian manufacturing firms. Moreover, in contrast to the previous firm-level studies in this area, this empirical analysis uses the actual values of external finance raised by the firms as a critical factor in determining their extensive and intensive margin of exports instead of the usual balance sheet variables such as liquidity and leverage.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 16 February 2024

Yasmine Kamal

The paper aims at studying the effect of management practices on the extensive and intensive export margins of Egyptian manufacturing firms.

Abstract

Purpose

The paper aims at studying the effect of management practices on the extensive and intensive export margins of Egyptian manufacturing firms.

Design/methodology/approach

The study relies on the 2020/2021 Egyptian Industrial Firm Behavior Survey (EIFBS) which comprises 2,383 manufacturing firms representing small, medium, and large sized firms located in different regions of Egypt: Urban Governorates, Lower Egypt, and Upper Egypt. It constructs an overall management z score for each firm to estimate its effect on a firm’s probability of exporting and value of exports using Ordinary Least Squares (OLS) regressions.

Findings

Results indicate that good management is associated with a higher probability of firm exporting as well as higher export revenues conditional on exporting, robust to controlling for the level of domestic sales. These effects do not differ by firm ownership or type of sector, but rather by firm size, with managerial competence raising the probability of exporting more for large-sized firms. Additionally, good management is associated with higher firm productivity, innovation and worker training propensities which gives evidence that it is both an efficiency and a quality enhancer. Moreover, monitoring and targeting practices have significant positive effects on both margins, while incentives are only significant for the extensive margin.

Practical implications

Firms that aim at enhancing their export prospects and revenues should devote resources to review and upgrade their management systems to boost their product quality and production efficiency. Policy-wise, the government should create a competitive market environment that is open to both domestic and foreign firms’ entry to stimulate the adoption of better management practices.

Originality/value

The paper is the first to explore the link between firm management practices and export outcomes for a MENA country (Egypt). It makes use of a recent survey, the 2020/2021 Egyptian Industrial Firm Behavior Survey (EIFBS). The findings shed light on the importance of different management components (monitoring, targeting and incentives) in driving a manufacturing firm’s export performance.

Details

African Journal of Economic and Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-0705

Keywords

Book part
Publication date: 7 June 2013

Mark Vancauteren

Recent literature on firm-level heterogeneity and trade has emphasized a self-selection mechanism: only the most productive firms can recover the transaction (sunk) costs for…

Abstract

Recent literature on firm-level heterogeneity and trade has emphasized a self-selection mechanism: only the most productive firms can recover the transaction (sunk) costs for serving foreign markets and become exporters. The role of trade integration is that a productivity gap between exporters and nonexporters becomes lower when the market becomes more integrated due to a fall in trade costs. The focus of this chapter is the role of EU harmonization of food regulations in explaining the intra-EU export-productivity premium. The food industry is an interesting case to examine because many directives and regulations of the Single Market Program concern this important economic sector and have the potential to affect trade and productivity. We use data on Dutch food processing firms for the 1979–2005 period, which we link with a dataset that codes food products subject to EU harmonization. The chapter confirms that more productive firms are more likely to enter the EU export market. The result of EU harmonization is that this probability increases. Second, we find a positive and significant export-productivity premium: that is, firms that export to other EU markets are more productive than nonexporting firms. This finding is robust to the estimation technique and the way we measured TFP growth. Third, when we test whether the export-productivity premium is affected by EU harmonization, we find weak evidence that is the case for Dutch food processing firms: much depends on the estimation method, the way we measure TFP growth, and the population of exporting firms.

Details

Nontariff Measures with Market Imperfections: Trade and Welfare Implications
Type: Book
ISBN: 978-1-78190-754-2

Keywords

Article
Publication date: 9 March 2012

Chandan Sharma and Ritesh Kumar Mishra

The purpose of this paper is to investigate the nexus between export participation and productivity performance of transport manufacturing firms in India, for the period 1994‐2006.

Abstract

Purpose

The purpose of this paper is to investigate the nexus between export participation and productivity performance of transport manufacturing firms in India, for the period 1994‐2006.

Design/methodology/approach

The relative performance of exporting vis‐à‐vis non‐exporting firms in the industry is examined by utilizing a semi‐parametric test based on the principle of first order stochastic dominance. Subsequently, the causal relation between export and productivity is tested by mainly focusing on learning‐by‐exporting and self‐selection hypotheses.

Findings

The authors' results suggest that productivity performance of firms does not directly affect the probability of exporting. However, the results do provide some evidence which indicates that good firms self‐select into the export market. Furthermore, it was also found that sunk costs of exporting are the key determinants of probability of exporting in the industry. Finally, the authors tested the effect of exporting on productivity and found that past exporting experience or history has a significant and positive impact on firms' productivity.

Practical implications

In the light of the findings of this study, it can be suggested that the trade policy in India should focus on encouraging firms to increase export participation. At the same time, the authors' evidence also advocates that the economic policies should also aim on technology enhancement (i.e. more incentive for R&D activities and training) of firms, to help them achieve higher levels of productivity and efficiency, which in turn will increase the probability of their survival in the highly‐competitive international export market.

Originality/value

The paper provides new evidence on the export‐productivity nexus from the Indian manufacturing industry by testing the empirical validity of the learning‐by‐exporting and self‐selection hypotheses, along with the role of sunk costs in export decisions of firms.

Details

Journal of Manufacturing Technology Management, vol. 23 no. 3
Type: Research Article
ISSN: 1741-038X

Keywords

Article
Publication date: 9 September 2022

Andrzej Cieślik, Jan Jakub Michałek and Anna Michałek

The main goal of this paper is to study empirically the importance of experience of top managers and firms for export performance, having controlled for a number of firm…

Abstract

Purpose

The main goal of this paper is to study empirically the importance of experience of top managers and firms for export performance, having controlled for a number of firm characteristics.

Design/methodology/approach

The study is based on the probit model applied to the 2020 edition of the BEEPS firm level survey. The authors analyze firms in 15 EU member and 15 non-member countries.

Findings

The results indicate that firm experience can increase the probability of direct exporting, but is not significant for indirect exporting. The results also support the importance of interaction between experience of managers and experience of firms. The authors conclude that only the combination of managerial and firm experience can have a positive and significant effect for direct exporting. This relationship is more pronounced in the case of EU members.

Research limitations/implications

The main limitations of our approach are related to data constraints. These include availability of only cross-sectional data and the limited number of individual characteristics of managers.

Practical implications

The importance of experience for exporting suggests that firms can break into foreign markets by hiring more experienced managers.

Social implications

Post-communist countries can improve their export performance by hiring more experienced managers that would stimulate direct exports. Moreover, they can also export indirectly through intermediaries.

Originality/value

In contrast to previous studies, the authors used a model proposed by Jørgensen and Schroder (2008) in which the authors endogenized the costs of exporting by linking them to firm and managerial experience. Then, the authors validated empirically the importance of experience for firm export performance, having controlled for the set of individual firm characteristics.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 2 September 2014

Ali Fakih and Pascal L. Ghazalian

The purpose of this paper is to analyse the export behaviour of manufacturing firms located in the Middle East and North Africa (MENA) region using data from the World Bank's…

Abstract

Purpose

The purpose of this paper is to analyse the export behaviour of manufacturing firms located in the Middle East and North Africa (MENA) region using data from the World Bank's Enterprise Surveys Database.

Design/methodology/approach

This paper examines the factors influencing the export behaviour of manufacturing firms located in the MENA region through a probit model for export decision and through a fractional logit model for export intensity.

Findings

The empirical results show significant positive effects of private foreign ownership, information and communication technology, and firm size on the probability of exporting and on export intensity of MENA manufacturing firms. Government ownership tends to exert negative effects on firms’ propensity to export. The results underscore enhancing effects of national economic development levels on firms’ export performance. Also, they indicate that firms’ propensity to export decreases with larger domestic market size. The empirical analysis reveals considerable heterogeneity in the implications of firm characteristics for firms’ export behaviour through firm size categories and across MENA countries.

Originality/value

This paper contributes to the literature by conducting overall and comparative cross-country empirical analyses of the factors influencing the export behaviour of manufacturing firms located in the MENA region. It also explores the specificities of small and large firms’ responses to the factors influencing firms’ export behaviour. The results have implications for policies intended to enhance industrial growth and international competitiveness of the manufacturing sector in the MENA region.

Details

Journal of Economic Studies, vol. 41 no. 5
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 1 June 2002

Vusi Gumede and VKamilla Rasmussen

This study, applying different statistical techniques on survey data, depicts variables that increase the probability to export of a small enterprise. Our analysis shows that…

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Abstract

This study, applying different statistical techniques on survey data, depicts variables that increase the probability to export of a small enterprise. Our analysis shows that business linkages such as networks, joint ventures and subsidiaries play an important role in increasing the probability to export of small enterprises. In addition to that, access to information, access to capital and the level of education increase the probability of a small enterprise to be an exporter. Consequently, we suggest that a national small business strategy should incorporate an element of networking amongst small enterprises and that small enterprise programs should encourage intermediaries to assist not only with networks but also with international market intelligence.

Details

Journal of Small Business and Enterprise Development, vol. 9 no. 2
Type: Research Article
ISSN: 1462-6004

Keywords

Article
Publication date: 20 September 2011

Edward Bbaale

This paper aims to investigate firm‐level interactions between productivity and exporting in Uganda's manufacturing sector.

Abstract

Purpose

This paper aims to investigate firm‐level interactions between productivity and exporting in Uganda's manufacturing sector.

Design/methodology/approach

The paper empirically tested two hypotheses that relate to the dynamic gains from trade and also have tended to dominate the literature; self‐selection and learning‐by‐exporting hypotheses. It employs proxies of self‐selection and learning‐by‐exporting obtained from indices of path dependence to fit maximum likelihood estimates of export behavior.

Findings

The results provide support for both hypotheses and it is also found that more experienced exporters reap more productivity gains from learning effects which is in line with the view that knowledge spillovers to exporting firms increase with the level of interaction in the global market place. Thus, learning‐by‐exporting is not a “short term” occurrence which takes place only in the first few years of entry in export markets after which it would fizzle out as a firm's exporting experience increases but rather, it is a cumulative process.

Practical implications

This paper generates a number of insights that can guide policy makers in designing policies to promote firm productivity growth that is an engine of growth in the private sector and by extension, would fuel up overall economic growth and poverty reduction.

Originality/value

Previous studies on exports and growth in Uganda have been basically focused on macro‐data analysis; yet, promoting rapid expansion of manufactured exports may require more than just a good macroeconomic policy environment. This study fills the research gap by relating firm‐level productivity performance to the microeconomic environment in which manufacturing firms operate.

Details

African Journal of Economic and Management Studies, vol. 2 no. 2
Type: Research Article
ISSN: 2040-0705

Keywords

Article
Publication date: 12 September 2016

Namsuk Choi

The purpose of this paper is to examine the effects of foreign trade liberalization and trade reforms on the process of structural upgrading, and explore the extent to which they…

Abstract

Purpose

The purpose of this paper is to examine the effects of foreign trade liberalization and trade reforms on the process of structural upgrading, and explore the extent to which they provide impetus for exports.

Design/methodology/approach

This paper accounts for trade liberalization dates, cumulative years in open regime, and the density of 1,006 products in the patterns of comparative advantage for 132 countries from 1975 to 2000. The effects of trade liberalizations and trade reforms in open regime on future export performance are estimated by using various empirical strategies.

Findings

This paper finds that the speed of moving from simple poor-country goods to rich-country goods in export depends not only on having a route to nearby goods of increasingly higher value, but also on the increase in the cumulative years in open regime. In particular, a 1 percent change in the relatedness across products with trade reform in open regime increases the probability of exporting a new product by 2.0 percent more.

Originality/value

A contribution of this paper is that it measures the extent to which trade reform in open regime affects the evolution of comparative advantage, even after taking account of the role of relatedness of exported products as in the Hausmann and Klinger (2006, 2007). In this paper, empirical findings of a comprehensive product level cross-country time-series data analysis may contribute to generalize the role of trade reform on structural upgrading not only for a pro-competitive export country like Korea but also for a typical developing country.

Details

Journal of Korea Trade, vol. 20 no. 3
Type: Research Article
ISSN: 1229-828X

Keywords

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