The small and medium enterprise (SME) sector in the Philippines is a significant
group within the economy in terms of firm numbers and total employment. However, the
SME sector’s share of exports is disproportionately small, which raises considerable policy
concerns. Prompted by the aforementioned policy issue, this study assesses the different
factors that affect SME decisions (a) to export (propensity) and (b) on how much to export
(intensity), i.e., export performance. The study utilizes data from the World Bank enterprise
surveys, which contain subjective elements concerning the impediments to conducting
business in general, e.g., concerns regarding labour regulations, shipping etc.
Using a Heckman selection model, the study finds that firm size is a robust determinant, both
of export propensity and intensity. It also suggests that while labour productivity is important
in determining the value of firm exports, there are certain firm qualities that are important to
the initial export decision, such as foreign ownership and the presence of informal
competition. Finding such determinants of SME export intensity and propensity provides the
direction for policy discussions.