Exports, Ownership and Firm Productivity: Evidence from China

Abstract

This paper examines the linkage between exports, ownership and firm productivity. Based on a panel data set that covers over 70,000 Chinese firms from 2001 to 2005, the estimation results provide strong evidence that exports play an important role in enhancing firm productivity. Foreign ownership improves firm performance, but foreign‐owned exporters benefit less from exporting activities compared with domestic exporters. These results are robust to a variety of methods used and consideration of endogeneity issue. We also find that the productivity gain from exporting is greater for new entrants into the international market, and the benefit declines when firms become more experienced. Firms that involve more in exports are more likely to develop new product, suggesting that export‐market participation promotes innovation.

Firm heterogeneity, market choice and productivity: Evidence from foreign‐owned enterprises in China

“… A few studies test the learning‐by‐exporting hypothesis using Chinese firm‐level data and reach a consistent conclusion supporting this hypothesis (e.g., Dai and Yu, ; Sun & Hong, ; Yang & Mallick, ). …”

“…Instead, many studies focus on the productivity spillover of FDI on local firms in developing countries. See Demena and van Bergeijk (2017) for a survey.6 A few studies test the learning-by-exporting hypothesis using Chinese firm-level data and reach a consistent conclusion supporting this hypothesis (e.g.,Dai and Yu, 2013;Sun & Hong, 2010;Yang & Mallick, 2010).…”

Developing inland China: The role of coastal foreign direct investment and exports

“…Using firm‐level panel data, Kamal () finds that firms acquired by the former have higher productivity. For export local impacts, Sun and Hong () show that foreign‐owned exporters have less productivity gain, compared with domestic exporters. These studies suggest that the heterogeneity issue should be given due consideration when estimating the inter‐regional impacts of coastal FDI and export.…”

Firm exporting and productivity: what if productivity is no longer a black box

“…International Study Group on Exports and Productivity, 2008), where the unobservable characteristics are treated as time-invariant factors of the error (Cameron & Trivedi, 2009). However, this approach cannot address time-variant unobserved firm or industry characteristics that might cause an endogeneity problem (Sun & Hong, 2011). An alternative approach called matching has been used as a means solve this problem in the previous studies (e.g.…”

“…Another common method of dealing with endogeneity involves the use of instrumental variables (IV) (Wooldridge, 2002), which has been recently used to consider the impact of export status on productivity growth (e.g. Park et al, 2010;Sun & Hong, 2011).…”