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For God's sake. The impact of religious proximity on firms' exports

Alessia Lo Turco () and Daniela Maggioni ()

No 418, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: Using a rich firm level data set for Turkish manufacturing, we test whether the sharing of similar religious beliefs with potential contracting parties drives a firm.s first time entry in export markets. We exploit variation in the practice of Islam across Turkish provinces andwe find that firms located in provinces characterised by stronger religiousness are more likely to enter export destinations with a higher share ofMuslims among their population. This result is robust to the control for trade, cultural and migration ties, reverse causality and to several further sensitivity checks. Religious proximity, in particular, eases export entry for producers of "trust intensive" goods and mitigates the role of export experience in subsequent foreign market entries. All in all, our evidence hints at the important role of religious proximity in reducing export entry sunk costs by fostering higher trust among contracting parties.

Keywords: Islam; export entry; uncertainty; cultural distance (search for similar items in EconPapers)
JEL-codes: F14 F11 D22 D80 N30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-bec, nep-cwa, nep-int and nep-soc
Date: 2016-05
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