Firm size and the choice of export mode

Type Report
Title Firm size and the choice of export mode
Publication (Day/Month/Year) 2011
In international trade models, it is typically assumed that manufacturers ship their
goods directly to their foreign customers. In reality, however, many manufacturers
call in trade intermediaries to perform this task for them. Which manufacturers
make use of this option? Theory suggests that it is mostly the small firms which are
not profitable enough to cover the high fixed costs of building an own distribution
network abroad. Large and efficient firms, on the contrary, prefer to export their
goods directly. The present paper brings this hypothesis to a test. Using survey
data from the World Bank Enterprise Survey conducted in Turkey in 2008, it shows
that there is indeed a negative correlation between firm size and the relative importance
of intermediated exports. This result is highly robust to the inclusion of a
variety of controls, different estimation methods, and different measures of firm size.

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