Abstract
Using firm-level data for Japan, this chapter examines the determinants of export and foreign direct investment (FDI) decisions. We contribute to the literature by employing a mixed logit model to incorporate any unobserved firm heterogeneity and by paying special attention to the quantitative significance of the determinants. We find that although the effect of productivity on export and FDI decisions is positive and statistically significant, this effect is economically negligible. The quantitatively dominant determinants of the export and FDI decision are instead the prior status of firms in terms of internationalization and unobserved firm characteristics. This finding suggests that foreign market entry costs, which vary substantially in size across firms, play an important role in the export and FDI decision. Using a unique dataset for small and medium enterprises, we further show that such non-productivity factors of firm internationalization that are unobserved in standard firm-level data include the risk and time preferences and international experience of decision makers.
| Original language | English |
|---|---|
| Title of host publication | Internationalization of Japanese Firms: Evidence from Firm-level Data |
| Publisher | Springer Japan |
| Pages | 73-94 |
| Number of pages | 22 |
| Volume | 9784431545323 |
| ISBN (Print) | 9784431545323, 443154531X, 9784431545316 |
| DOIs | |
| Publication status | Published - 2013 Dec 1 |
| Externally published | Yes |
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Keywords
- Exports
- FDI
- Internationalization
- Japan
- Mixed logit
- Productivity
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Business, Management and Accounting(all)
Cite this
The role of non-productivity factors in the internationalization of firms. / Todo, Yasuyuki.
Internationalization of Japanese Firms: Evidence from Firm-level Data. Vol. 9784431545323 Springer Japan, 2013. p. 73-94.Research output: Chapter in Book/Report/Conference proceeding › Chapter
}
TY - CHAP
T1 - The role of non-productivity factors in the internationalization of firms
AU - Todo, Yasuyuki
PY - 2013/12/1
Y1 - 2013/12/1
N2 - Using firm-level data for Japan, this chapter examines the determinants of export and foreign direct investment (FDI) decisions. We contribute to the literature by employing a mixed logit model to incorporate any unobserved firm heterogeneity and by paying special attention to the quantitative significance of the determinants. We find that although the effect of productivity on export and FDI decisions is positive and statistically significant, this effect is economically negligible. The quantitatively dominant determinants of the export and FDI decision are instead the prior status of firms in terms of internationalization and unobserved firm characteristics. This finding suggests that foreign market entry costs, which vary substantially in size across firms, play an important role in the export and FDI decision. Using a unique dataset for small and medium enterprises, we further show that such non-productivity factors of firm internationalization that are unobserved in standard firm-level data include the risk and time preferences and international experience of decision makers.
AB - Using firm-level data for Japan, this chapter examines the determinants of export and foreign direct investment (FDI) decisions. We contribute to the literature by employing a mixed logit model to incorporate any unobserved firm heterogeneity and by paying special attention to the quantitative significance of the determinants. We find that although the effect of productivity on export and FDI decisions is positive and statistically significant, this effect is economically negligible. The quantitatively dominant determinants of the export and FDI decision are instead the prior status of firms in terms of internationalization and unobserved firm characteristics. This finding suggests that foreign market entry costs, which vary substantially in size across firms, play an important role in the export and FDI decision. Using a unique dataset for small and medium enterprises, we further show that such non-productivity factors of firm internationalization that are unobserved in standard firm-level data include the risk and time preferences and international experience of decision makers.
KW - Exports
KW - FDI
KW - Internationalization
KW - Japan
KW - Mixed logit
KW - Productivity
UR - http://www.scopus.com/inward/record.url?scp=84930893866&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84930893866&partnerID=8YFLogxK
U2 - 10.1007/978-4-431-54532-3_4
DO - 10.1007/978-4-431-54532-3_4
M3 - Chapter
AN - SCOPUS:84930893866
SN - 9784431545323
SN - 443154531X
SN - 9784431545316
VL - 9784431545323
SP - 73
EP - 94
BT - Internationalization of Japanese Firms: Evidence from Firm-level Data
PB - Springer Japan
ER -