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Determinants of Internationalization: Differences between Service and Manufacturing SMEs

Anna Lejpras ()

No 886, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper empirically investigates the antecedents of internationalization of SMEs, focusing on differences between the manufacturing and service sectors. Specifically, employing a bivariate probit model based on survey data of approximately 3,900 East German firms, I analyze which firm-related and external factors affect a firm's decision to export and/or relocate production or other operations abroad. Generally, I find that SMEs from the manufacturing sector do more exporting than service firms. The results reveal that size, having main competitors located abroad, and introducing a novel product all are significantly positively related to the internationalization of SMEs regardless of industry affiliation. However, manufacturing firms in the high-tech sector are far more likely to be engaged in internationalization activity than are service firms, regardless of whether the latter are high-tech. Locational conditions and cooperation activities are generally less important for internationalization of service firms, too, compared to their manufacturing counterparts.

Keywords: Internationalization; service; manufacturing; Bivariate Probit Model (search for similar items in EconPapers)
JEL-codes: M16 M20 L25 R30 O30 (search for similar items in EconPapers)
Pages: 29 p.
Date: 2009
New Economics Papers: this item is included in nep-cse and nep-ent
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