The Duration of Firm‐destination Export Relationships: Evidence From Spain, 1997–2006

Abstract

This article uses survival analysis to investigate the duration of Spanish firms' trade relationships by destination over 1997–2006. Whereas firm export status is highly persistent, firms' destination portfolio is very dynamic: a typical firm‐country exporting relationship has a median duration of 2 years. Yet, if a firm manages to export to a country beyond 2 years the risk of exiting that market sharply falls afterwards. The results indicate that not only firm heterogeneity but also destination heterogeneity are crucial to explain survival in export markets. In particular, country (political) risk heavily shapes the effect of firm, product, and other destination characteristics on the length of trade relationships. Whereas firm productivity, comparative advantage, partners' GDP, and proximity enhance duration of trade with low‐risk countries, they have no effect on trade survival with high‐risk countries. On the contrary, information spillovers are particularly relevant to enhance survival of trade relationships with high‐risk countries. (JEL C41, F10, F14)

Export Experience, Product Differentiation and Firm Survival in Export Markets

“…industry, year and cohort) are fully controlled for in this estimation, this negative effect of export duration on the probability of exiting from export markets implies that firms are less likely to stop exporting the longer they continue exporting, which is consistent with the theoretical predictions mentioned in Section 2. Second, firms with higher TFP tend to survive in export markets for a longer period, which is consistent with the findings of previous studies, such as those by Békés and Muraközy (), Görg et al () and Esteve‐Pérez et al (). Third, as expected, firms with a high RDRATIO or ADVRATIO tend to survive in export markets longer.…”

“…Although there have recently been a number of studies focusing on firm‐level characteristics in explaining export duration (e.g. Békés and Muraközy, ; Esteve‐Pérez et al, ; Gullstrand and Persson, ), such firm‐level empirical evidence is still comparatively scarce. This means that our knowledge on firm‐level trade patterns (in particular temporary or “on–off” exporting by firms) is still limited and that it is not sufficiently clear what kind of firms become “always exporters”.…”

Overseas Market Information and Firms' Export Decisions

“…First, our long panel data set allows us to conduct a survival analysis-type study on the status of exporting firms. Very few studies have examined the determinants of survival in export markets through hazard estimation using firm-level data, with the exception of Esteve-Pérez et al (2013). This is another important dimension discussed in the theoretical international trade literature (e.g., Schröder and Sørensen 2012).…”

Export experience and key success factors in cross-border trade: Evidence from Southern Africa

“…This is in line with the observation by Dunn and Bradstreet (2011), who state that just half of all the new ventures will still be in business after 10 years and that the risk of export closure is highest during the firm's first 5 years of operations. In a pooled regression analysis, Esteve-Pérez et al (2013) also found out that trading relationships by younger firms (up to 10 years old) last longer than those of older firms. Relationships are a lifeline to venture survival.…”