The inefficiency of exporting SMEs: Evidence from manufacturing industry

Antonio Fabio Forgione and Carlo Migliardo

The Journal of International Trade & Economic Development, 2023, vol. 32, issue 2, 313-341

Abstract: This paper analyzes the drivers of firms' technical efficiency among exporting Italian small-to-medium enterprises (SMEs). It fills a gap in the literature on international SMEs' performance by relating their profit and cost efficiency to a set of core determinants. We find that profit efficiency decreases as export intensity grows unless a firm achieves a medium scale. The evidence highlights another interesting trend: regardless of firm size, workforce experience shows a non-monotonic relationship with both a firm's profit and the cost-efficiency score. Further, a firm's debt sustainability affects its efficiency performance negatively in terms of profit but positively in terms of cost. Conversely, a higher financial burden leads to better profit efficiency for medium-sized enterprises, but this effect is reversed for smaller firms. These results have important policy implications, not only for policymakers but also for firms' management, pursuing a competitive advantage to navigate the stormy international market.

Date: 2023
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DOI: 10.1080/09638199.2022.2098527

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