Exit in globalising industries: the role of international (out)sourcing

K. Coucke and Leo Sleuwaegen

Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School

Abstract: This paper studies the impact of globalisation on the exit behaviour of domestic and foreign firms in the manufacturing industries of Belgium, one of the most open economies in the world. The strongest effects are found to come from rising import growth and rising multinational firms penetration of the industry, which systematically increase the probability of exit of (inefficient) domestic firms. Product differentiation and international (out)sourcing moderate this impact and lower the risk of exit. Controlling for productivity differences across firms, exporting on itself does not lower the probability of exit. Subsidiaries of multinational firms are found to be subject to similar disciplinary forces from import competition as domestic firms but do not show exit to respond to the same passive learning process.

Keywords: Exit; Sourcing; International Competition (search for similar items in EconPapers)
Pages: 33 pages
Date: 2006-06-01
New Economics Papers: this item is included in nep-bec, nep-com and nep-cse
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