The Decision to Enter and Exit Foreign Markets: Evidence from U.K. SMEs

Francisco Requena-Silvente ()
Authors registered in the RePEc Author Service: Francisco Requena Silvente

Small Business Economics, 2005, vol. 25, issue 3, 237-253

Abstract: This paper studies the dynamics of the export behaviour of small and medium sized enterprises (SMEs) in the U.K. between 1994 and 1998. I use a dynamic empirical model to disentangle three distinct dimensions of a firms’ participation in foreign markets: sunk cost induced hysteresis, firm heterogeneity and macroeconomic instability. The results show that SMEs view exporting as an irreversible investment, with state dependence being the largest explanatory factor. Moreover, observable firm characteristics, such as size and ownership, play a significant role in distinguishing exporters from non-exporters. Finally, there is no evidence that the 1992–1993 recession influenced firms’ export decisions in subsequent years implying that the results provide a valid indication of SMEs "typical" export behaviour. Copyright Springer 2005

Keywords: entry-exit decision; markets; probit; panel techniques (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (23)

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DOI: 10.1007/s11187-003-6460-x

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