 Why do some firms stop exporting?Jaehoon Jeong and Jae-Suk Yang International Business Review, 2023, vol. 32, issue 4 Abstract: During economic turbulence, such as those caused by the US-China conflict and COVID-19, sunk cost effect has garnered attention in IB literature. As it becomes increasingly difficult to predict export profits, relying on sunk costs for strategic positioning in export markets appears to be a rational decision. However, few studies quantitatively examined sunk cost effect variations, especially in export-exit decision-making. In our study, we quantified sunk cost effect with respect to export performance and export portfolio, specifically in terms of export-exit probability. Our findings indicate that the export-exit rate due to sunk cost effect is less than 50% only if export volume surpasses a certain threshold. Consequently, we have provided an explanation for why export exits still occur in the presence of high sunk costs. Additionally, we have identified that geographic diversification, up to four destinations, has more synergy with sunk cost effect than product diversification, particularly in volatile environments. Keywords: Export sunk costs; Sunk cost effect; Export exit (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:32:y:2023:i:4:s0969593123000410 Ordering information: This journal article can be ordered from DOI: 10.1016/j.ibusrev.2023.102141 Access Statistics for this article International Business Review is currently edited by P. Ghauri More articles in International Business Review from Elsevier |
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