Too Small to Export: Firm Characteristics for Export Market Participation in Manufacturing Sector

Emran, Sheikh Jafar and Azad, Abul Kalam (2017): Too Small to Export: Firm Characteristics for Export Market Participation in Manufacturing Sector. Published in: International Journal of SME Development No. Issue 03 (December 2017) (November 2018): pp. 43-64.

Abstract

This paper attempts to identify factors that facilitate export decision of a firm. Enterprise survey of WB has been used to capture those factors through Probit model. Our results suggest that firm size, improved organizational structure, owning/sharing a generator and formal training are the most crucial properties of a firm that shape a firm’s decision to export. The probability of export is higher for larger firms while small firms tend not to export due to the fact that large firms can enjoy economies of scale, utilize economies of scope, capacity to bear shocks. On average, small firms have 0.36 % less probability to export than a large firm. Continuous supply of electricity is positively related with production, hence, owning/sharing a generator increases the probability of export for any firm. Specifically, if a firm owns/hires a generator from its no generator status, its probability of export increases by .16% than the firms that do not own/hire a generator. Moreover, formal training has positive and significant impact on the probability of export through efficiency and skill augmentation. Firms that give training to their workers have .20% more probability of export than the firms that do not give training to their workers. The marginal effect of improved organizational structure is 0.17% implies structured organizational hierarchy and specialized personnel management assist firms to engage in export through high buyer’s satisfaction.

• Item Type: MPRA Paper
• Language: English
• Keywords: Export Determination, Probit Model, Firm Size and Firm Characteristics
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope; L - Industrial Organization > L6 - Industry Studies: Manufacturing

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