Does it pay to venture abroad? Exporting behavior and the performance of firms in Indian industry

Abstract

Using contemporary data for a firm-level sample of over 600 Indian firms, this paper investigates the impact that an export-orientation has on the profitability of the firms studied. The results, based on a two-stage least squares method, establish a positive and significant relationship between firms' levels of exports and profitability. For firms from developing and transition economies like India it does pay to venture abroad, and the ability to sell goods overseas has a significant impact on firms' economic performance.

Private Enterprise Growth and Human Capital Productivity in India

“…This share was very large, in fact more than half and close to two-thirds, at the start of the period being evaluated, but has reduced in size significantly since then. Even if further investments are being made by the government in its companies, the private sector has been dynamic in establishing more Table 3 Evaluating Changes in the Proportions of Government Companies and Their Shareholdings from 1973-1974to 1997-1998 Growth or decline in proportion of government companies Growth or decline in government companies' proportion of share capital PANEL A: for the time period : 1973-1974 to 1997-1998 Column ( 1991-1992 to 1997-1998 Intercept .384*** 59.032*** Growth -.042*** -4.997*** Acceleration .001** -.095 R 2 .998 .992 *** p < .01, ** p < .05.…”

“…The key explanatory variables are: (a) the proportion of the number of government companies of the total number of companies in India's corporate sector (proportion government) and (b) the proportions of the paid up capital of government companies to the total paid up equity capital in the corporate sector (government equity). 1973-1974to 1997-1998For the period: 1973-1974-1991For the period: 1991-1992to 1997-1998 Notes: Figures in the cell: t-statistic for test of performance differences between two ownership types. Null hypothesis tested: No performance difference between the ownership type as listed in the column versus the organization type as listed in each of the rows.…”

“…These firms would not only bring in private sector attitudes, that in general would affect performance in a positive way, but also bring in the experience and learning that they would have acquired by operating overseas. The undertaking of overseas operations is recognized as providing substantial efficiency boosts (Chhibber & Majumdar, 1998). This learning, and experience gained in engendering efficiency gains via operating in global markets, will have also permitted the technology firms to have contributed in a material way to domestic productivity via mimetic effects as domestic firms in other sectors, both privately owned and government-owned, imitated the practice of these entrepreneurial firms in the technology sector.…”