Does Multimarket Participation Help Enterprises Survive Industry Distress? A Study Using Chinese Firm‐Level Data

Yinxia Mi, Zhuangxiong Yu, Pundarik Mukhopadhaya and Yang Yang

The World Economy, 2025, vol. 48, issue 9, 2220-2240

Abstract: This paper explores differences in business performance between multimarket enterprises (that participate in both domestic and foreign markets) and single‐market enterprises (that participate only in either a domestic or a foreign market) during a time of industrial distress. Using China Annual Survey of Industrial Firms data for manufacturing industries from 1998 to 2014, this study establishes that multimarket participation enables enterprises to smooth the impact of market volatility and reduce any adverse effects in sales growth during industry distress. More specifically, it is noted that multimarket enterprises enjoy relatively higher sales growth compared with their single‐market counterparts during periods of industry distress. This result remains relatively robust to alternative estimation techniques and sampling methodologies that control for endogeneity attributable to firms' decisions to participate in multiple markets. It is also robust to alternative measures of market participation and industry distress. It is noted that multimarket participation shows marked advantages during periods of industry distress in concentrated industries, nonstate‐owned enterprises, and periods without a global economic crisis. Further analysis shows that a multimarket strategy contributes more to domestic market performance during both domestic and export market industry distress.

Date: 2025
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