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The Effect of Social Interactions on Exporting Activities: Evidence from Micro, Small, and Medium-Sized Enterprises in rural Vietnam

Daichi Shimamoto, Yu Ri Kim and Yasuyuki Todo

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This study examines the effect of social interactions on exporting activities of micro, small, and medium-sized enterprises (MSMEs) in traditional apparel and textile clusters in Vietnam. To deal with econometric issues due to the reflection problem of Manski and endogeneity of network formation, we apply the estimation method developed by Bramoullé et al. (2009). Specifically, we eliminate the sub-network fixed effects using within transformation and instrument the average share of exports among peers of the focal firm by attributes of its peers' peers. This method enables us to identify the effects of exporting activities of the focal firm's peers on its own exporting activities (the endogenous effect according to Manski) and the effect of its peers' attributes (the exogenous effect). We find that peers' export share has a negative and significant effect on own export share, suggesting that the negative competition effect surpasses the positive learning effect. We also find that firms are encouraged to export by their large peers, possibly because firms can obtain technology spillovers from large peers and thus can be productive enough to start exporting.

New Economics Papers: this item is included in nep-int, nep-sbm, nep-sea, nep-soc, nep-tra and nep-ure
Date: 2019-03
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:19020

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