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Overseas business costs and firm export performance

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  • Richard Kneller
  • Mauro Pisu
  • Zhihong Yu

Abstract

. The recent microeconomic literature on international trade has highlighted the importance of firm characteristics and trade costs for exports. This study provides evidence on one type of those costs, the costs of doing business overseas, from a theoretical and empirical perspective. Controlling for firm‐ and industry‐level covariates, we find that improvements in the business environment of foreign countries lead to an increase in the export intensity of exporters in the UK manufacturing sector and additional export market entry. Further investigation suggests that important determinants of foreign business costs include factors relating to legal structure, property rights, and business regulation. La littérature micro‐économique sur le commerce international a souligné l'importance des caractéristiques de la firme et des coûts de transaction pour expliquer la performance à l'exportation. Ce mémoire fournit de l'information sur l'un de ces coûts de transaction – les coûts de faire des affaires outre‐mer – dans une perspective théorique et empirique. Normalisant pour les co‐variations au niveau de la firme et de l'industrie, on découvre que les améliorations dans le monde des affaires des pays étrangers tendent à faire croître l'intensité des exportations des exportateurs du secteur manufacturier au Royaume Uni, et à assurer une entrée additionnelle sur le marché d'exportation. Il appert que les déterminants les plus importants du coût de faire des affaires à l'étranger sont des facteurs reliés à la structure légale, aux droits de propriété, et à la régulation publique du monde des affaires.

Suggested Citation

  • Richard Kneller & Mauro Pisu & Zhihong Yu, 2008. "Overseas business costs and firm export performance," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 639-669, May.
    • Handle: RePEc:wly:canjec:v:41:y:2008:i:2:p:639-669
    DOI: 10.1111/j.1540-5982.2008.00480.x
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    2. Gianmarco Ottaviano & Christian Volpe Martincus, 2011. "SMEs in Argentina: who are the exporters?," Small Business Economics, Springer, vol. 37(3), pages 341-361, October.
    3. Christian Volpe Martincus & Jerónimo Carballo, 2010. "Export Promotion: Heterogeneous Programs and Heterogeneous Effects," IDB Publications (Working Papers) 36759, Inter-American Development Bank.
    4. Richard Upward & Zheng Wang & Jinghai Zheng, 2010. "Weighing China's Export Basket: An Account of the Chinese Export Boom, 2000--2007," Discussion Papers 10/14, University of Nottingham, GEP.
    5. David Greenaway & Richard Kneller & Xufei Zhang, 2012. "The effect of exchange rates on firm exports and the role of FDI," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(3), pages 425-447, September.
    6. Fakih, Ali & Ghazalian, Pascal L., 2013. "Why Some Firms Export? An Empirical Analysis for Manufacturing Firms in the MENA Region," IZA Discussion Papers 7172, Institute of Labor Economics (IZA).
    7. Joseph LiPuma & Scott Newbert & Jonathan Doh, 2013. "The effect of institutional quality on firm export performance in emerging economies: a contingency model of firm age and size," Small Business Economics, Springer, vol. 40(4), pages 817-841, May.
    8. Francesco Serti & Chiara Tomasi, 2009. "Self-selection along different export and import markets," LEM Papers Series 2009/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    9. Osiris Jorge Parcero & Emiliano Villanueva, 2024. "World Wine Exports: What Determines the Success of New World Wine Producers?," Papers 2401.04696, arXiv.org.
    10. Xiong, Tingting, 2022. "The Effect of Bilateral Investment Treaties (BITs) on the extensive and intensive margins of exports," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 68-79.
    11. Lejour, Arjan & Rojas Romasgosa, Hugo & Rodriguez, Victor & Montalvo, Carvos & Van der Zee, Frans, 2009. "Trade costs, Openness and Productivity: Market Access at Home and Abroad," MPRA Paper 21214, University Library of Munich, Germany.
    12. Volpe Martincus, Christian & Carballo, Jerónimo, 2010. "Export Promotion: Heterogeneous Programs and Heterogeneous Effects," IDB Publications (Working Papers) 3176, Inter-American Development Bank.
    13. Hong, Chang & Wu, Haoyu, 2018. "Export spillover and location choice," Journal of the Japanese and International Economies, Elsevier, vol. 49(C), pages 54-68.

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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