Sequentially exporting products across countries
Sequentially exporting products across countries
Exploiting disaggregated data on French exporters, we show that firms expand their product scope and geographical presence sequentially. This process of internationalization is uneven over time, exhibiting more volatility early than later in the life cycle of exporters. Specifically, young exporters are particularly likely to exit, and if they keep exporting, to expand at the intensive and sub-extensive margins, doing so by widening product scope within a destination before entering new destinations. We also find that firms' core products are particularly resilient despite being used to “test the waters” when entering additional countries. Existing models of firm export dynamics are not designed to explain these empirical regularities. We argue that they can be rationalized by a mechanism where new exporters are uncertain about the profitability of their products in different markets, but learn from their initial export experiences and then adjust their sales, number of products and destination countries accordingly.
Experimentation, Export dynamics, Market interdependence, Multiproduct firms, Uncertainty
Albornoz, Facundo
cfb2a97e-744b-4609-b517-9a5627139f20
Calvo-Pardo, Hector
07a586f0-48ec-4049-932e-fb9fc575f59f
Corcos, Gregory
e7e96cdd-60e1-48d3-9bf9-fc87ed024c05
Ornelas, Emanuel
cf4f6d37-09cc-4774-838e-2d5b98ce5828
May 2023
Albornoz, Facundo
cfb2a97e-744b-4609-b517-9a5627139f20
Calvo-Pardo, Hector
07a586f0-48ec-4049-932e-fb9fc575f59f
Corcos, Gregory
e7e96cdd-60e1-48d3-9bf9-fc87ed024c05
Ornelas, Emanuel
cf4f6d37-09cc-4774-838e-2d5b98ce5828
Abstract
Exploiting disaggregated data on French exporters, we show that firms expand their product scope and geographical presence sequentially. This process of internationalization is uneven over time, exhibiting more volatility early than later in the life cycle of exporters. Specifically, young exporters are particularly likely to exit, and if they keep exporting, to expand at the intensive and sub-extensive margins, doing so by widening product scope within a destination before entering new destinations. We also find that firms' core products are particularly resilient despite being used to “test the waters” when entering additional countries. Existing models of firm export dynamics are not designed to explain these empirical regularities. We argue that they can be rationalized by a mechanism where new exporters are uncertain about the profitability of their products in different markets, but learn from their initial export experiences and then adjust their sales, number of products and destination countries accordingly.
More information
Accepted/In Press date: 8 February 2023
e-pub ahead of print date: 13 February 2023
Published date: May 2023
Additional Information:
Funding Information:
We thank Costas Arkolakis and two anonymous referees for very useful suggestions. We also thank Andrew Bernard, Paola Conconi, Meredith Crowley, Swati Dhingra, Aaron Flaaen, Alejandro Graziano, Fredrik Heyman, Henrik Horn, Vincent Rebeyrol, Ariell Reshef, Felix Tintelnot, Maurizio Zanardi, as well as seminar participants at the 2021 European Winter Meeting of the Econometric Society, CESifo Global Economy Workshop, Recent Trends in Firm Organization and Trade Dynamics Conference, ETSG, FREIT EIIT, FREIT SETC, IFN, Erasmus University, University of Cambridge, University of Cergy-Pontoise, University of Paris-Est and CREST for valuable comments. This work was supported by a grant overseen by the French National Research Agency (ANR) as part of the “Investissements d'Avenir” Programme (LabEx ECODEC; ANR-11-LABX-0047 ), as well as a grant from the ANR's JCJC Programme . Calvo-Pardo gratefully acknowledges research time spent while visiting the University of Cambridge Faculty of Economics, partly funded by the ESRC through its Centre for Population Change, transition grant ES/R009139/1 . Ornelas acknowledges financial support from the Brazilian Council of Science and Technology (CNPq).
Funding Information:
We thank Costas Arkolakis and two anonymous referees for very useful suggestions. We also thank Andrew Bernard, Paola Conconi, Meredith Crowley, Swati Dhingra, Aaron Flaaen, Alejandro Graziano, Fredrik Heyman, Henrik Horn, Vincent Rebeyrol, Ariell Reshef, Felix Tintelnot, Maurizio Zanardi, as well as seminar participants at the 2021 European Winter Meeting of the Econometric Society, CESifo Global Economy Workshop, Recent Trends in Firm Organization and Trade Dynamics Conference, ETSG, FREIT EIIT, FREIT SETC, IFN, Erasmus University, University of Cambridge, University of Cergy-Pontoise, University of Paris-Est and CREST for valuable comments. This work was supported by a grant overseen by the French National Research Agency (ANR) as part of the “Investissements d'Avenir” Programme (LabEx ECODEC; ANR-11-LABX-0047), as well as a grant from the ANR's JCJC Programme. Calvo-Pardo gratefully acknowledges research time spent while visiting the University of Cambridge Faculty of Economics, partly funded by the ESRC through its Centre for Population Change, transition grant ES/R009139/1. Ornelas acknowledges financial support from the Brazilian Council of Science and Technology (CNPq).
Publisher Copyright:
© 2023 Elsevier B.V.
Keywords:
Experimentation, Export dynamics, Market interdependence, Multiproduct firms, Uncertainty
Identifiers
Local EPrints ID: 475407
URI: http://eprints.soton.ac.uk/id/eprint/475407
ISSN: 0022-1996
PURE UUID: c348971c-f8ad-4759-b386-d69b4d9d9197
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Date deposited: 17 Mar 2023 17:32
Last modified: 17 Mar 2024 03:05
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