Exports-performance relationship in Russian manufacturing companies

Abstract

Purpose The purpose of this paper is to examine the relationship between export activity and firm performance for a positive impact of foreign direct investments (FDIs). The authors also analyze two possible causes of the effect: technology transfer and financial support. The theoretical background is rooted in the resource-based approach taking into account multinational companies’ perspective and the specifics of emerging markets. Design/methodology/approach The authors propose testable hypotheses based on a review of the theory. To test the hypotheses, the authors build a sample of over 500 Russian public manufacturing firms covering the period from 2004 to 2014 and estimate regression models. Given concerns about endogeneity, the instrumental variable approach for panel data, using the GMM-estimator, is implemented. Findings Consistent with the view that FDIs generate spillover effects, the results support the positive impact of foreign ownership on the link between exports and firms’ performance. The results underline the importance of foreign ownership: shareholders from developed countries can provide benefits to exporting companies through transferring advanced technologies and loosening financial constraints by lowering interest and raising availability of bank loans. Originality/value The authors provide new insights on the relationship between exports and firm performance. Given our focus on Russia, a market with high potential to draw foreign investments, the research sheds some light on how emerging country firms can benefit from having foreign shareholders with paying attention to geographical distribution of such investments. Specifically, through the overcoming of technological barriers and loosening of financial constraints, the authors show empirically that foreign capital can make up for weak local institutional infrastructure and enhance the company’s returns from internationalization.

Foreign Ownership Shares and Trade Propensity in Indonesian Edible Oil, Vegetable and Animal Fats Industry

“…Ramstetter (2018) stated the same result on industries in Thailand which showed that the export propensity would be higher for firms that were wholly foreign owned. Bykova & Lopez-Iturriaga (2018) support positive impact of foreign ownership on the link between exports and firms' performance in Russian manufacturing companies. Therefore of the sign of the relationship, the evidence clearly points to the existence of an influence of ownership concentration on a firm's export propensity (Miravitlles et al, 2018).…”

Towards an analysis of the determinants of exports in Brazil: the perspective of exporting companies

“…Although it is a standard indicator in this type of research, it could also have been combined with both financial and non-financial indicators (Sadeghi et al , 2018). Moreover, progress could be made regarding the relationship between exports and firm’s performance (Bykova and Lopez-Iturriaga, 2018).…”

Determinants of the performance of small and medium-sized enterprises in emerging markets

“…The higher ROA reflects the effective use of assets by enterprises to serve economic benefits for shareholders. Therefore, ROA can reflect many ways on the relationship between corporate governance and firm performance (Al-Matari et al , 2014; Bykova and Lopez-Iturriaga, 2018). Thus, the designated research model for the factors affecting the firm performance of small and medium-sized enterprises in emerging markets, a case of Vietnam, is as follows:…”

“…Firm size. A company that has a large size will have a large capacity to diversify production and business activities (Bykova and Lopez-Iturriaga, 2018) and implement strategies to increase barriers to potential competitors. At the same time, large-scale enterprises have a lot of power in negotiating prices for the input materials to reduce average costs (Pratheepan, 2014) and improve their profitability and performance (Piao and Moon, 2019).…”