The role of firm-to-firm relationships in exporter dynamics

Davide Rigo

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper investigates the role of firm-to-firm relationships in export market dynamics, documenting the following stylized facts for French exporters. First, exporters grow in a foreign market by expanding their customer base; the average French exporter doubles its number of buyers after 8 years. Second, sales to existing customers remain the predominant source of growth in a foreign market, with long-lasting relationships contributing to most export values. Third, as a mechanism driving firms' growth in a relationship, prices fall as a relationship ages. Fourth, I exploit the Brexit referendum as a quasi-natural experiment to examine how firm-to-firm relationships adjust in response to changes in market access. I find that French exporters with long-lasting relationships in the UK are less affected by the referendum shock and exhibit higher exchange rate pass-through. Overall, these findings indicate that long-lasting relationships represent a crucial margin for export market growth and in shielding exporters from changing market conditions.

JEL-codes: L20 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2024-04-01
New Economics Papers: this item is included in nep-bec and nep-int
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Published in Economica, 1, April, 2024, 91(362), pp. 569 - 587. ISSN: 0013-0427

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:121135

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