Occasional and perennial exporters

Explaining intermittent exporting: Exit and conditional re-entry in export markets

“…Similar results have been found for Italian SMEs, with repeated, serial entry and exit to and from export markets being relatively commonplace, and firms taking time to build up the experience and internal assets necessary to make export market entry a clear strategic decision (Bonaccorsi, 1992). Research on other countries suggests this is not a specifically European phenomenon, with similar patterns of intermittent exporting reported for Colombia (Eaton, Eslava, Kugler, & Tybout, 2008) and Chile (Blum, Claro, & Horstmann, 2013). However, while the phenomenon has been observed, there is little systematic analysis of the causes of intermittent exporting, or of the precise conditions that make it more likely to occur.…”

“…Precisely such a scenario is outlined by Crick (2003), and demonstrated for British new technology-based firms by Love and Ganotakis (2013). And in their analysis of Chilean firms, Blum et al (2013) find that intermittent exporters tend to have lower capital intensity, possibly related to their lower productivity. By contrast, larger and more productive firms are less likely to be adversely affected by increased demand in expanding export markets, and are also more able to cope with increased production in times of rising domestic demand without the need to switch out of export markets, an option which may be more difficult for smaller firms and those further from the productivity frontier.…”

“…A strong substitute relationship between domestic and foreign sales can most clearly be found in Spain, Portugal and Italy, providing evidence of the importance of sunk costs and suggesting that history matters in international trade. In their analysis of Chilean firms, Blum et al (2013) find that intermittent exporters have lower capital (either given exogenously or related to their lower productivity): as a consequence the marginal costs of exporting is higher when domestic demand is high since it is more profitable to sell domestically. When domestic demand is low it becomes more profitable to sell to foreign markets, and as a result firms reduce domestic sales and start exporting.…”

“…Ex ante categorizations of intermittent exporters on the basis of their revealed behavior are bound to be arbitrary: each continuous exporter within a particular time window may have been an intermittent exporter before or after the period of observation (Blum et al, 2013). By contrast, the analysis we perform does not rely on ex ante categorization and arbitrary definition.…”

A survey of empirical studies using transaction level data on exports and imports

“…Previous experience in exporting a certain product, or exporting to a certain market, increases the probability to export these products to new markets, or new products to the same markets. Again for Chile, Blum et al (2013) find that one third of exporters enter into and exit from exporting multiple times, and that most continuing exporters enter and exit specific export destinations multiple times. Rahu (2015) report that in Estonia adding and dropping new products in exports is rife, about half of all firms change their export portfolio annually.…”