Supply chains and the internationalization of small firms
- 837 Downloads
This paper explores the relation between supply-chain participation and the internationalization of firms. We show that even small and less productive firms, if involved in production chains, can take advantage of reduced costs of entry and economies of scale that enhance their probability of exporting. The empirical analysis is carried out on an original database, obtained by merging and matching balance-sheet data with data from a survey on over 25,000 Italian firms, which include direct information on the involvement in supply chains. We find a positive and significant relation between being part of a supply chain and the probability of exporting, as well as the intensive margin of trade. The number of foreign markets served (the extensive margin), on the other hand, does not seem to be affected. We also investigate whether being in different positions along the chain, i.e., upstream or downstream, matters, and we find that downstream producers tend to benefit more. Our results are robust to different specifications, estimation methods, and the inclusion of the control variables typically used in heterogeneous firms models.
KeywordsSupply chains Global value chains Internationalization Small and medium enterprises Heterogeneous firms
JEL ClassificationsF12 F14 F21 L26
We would like to thank two anonymous referees, Tadashi Ito and the participants to the Royal Economics Society Conference (Manchester, April 7–9, 2014); the Italian Trade Study Group Conference (November 2013); the 15th European Trade Study Group Conference (September 2013); the 10th c.Met05 Workshop (July 2013) and seminars at University of Florence, and IDE-JETRO for their comments on previous drafts of the paper. Financial support from the Regione Sardegna for the project CIREM “Analysis of competitiveness of Sardinia’s production system” is gratefully acknowledged.
- Accetturo A., Giunta A., & Rossi S. (2011). The Italian firms between crisis and the new globalization. Questioni di Economia e Finanza (Occasional Papers) 86, Bank of Italy, Economic Research and International Relations Area. doi: 10.2139/ssrn.1849865.
- Becattini G. (1990). The Marshallian industrial district as a socio-economic notion. In F. Pyke, G. Becattini, & W. Sengenberger (Eds.), Industrial district and inter-firm cooperation in Italy (pp. 37–51). International Institute for Labour Studies, Geneva. ISBN:929014467X, 9789290144670.Google Scholar
- Brusco S., & Paba S. (1997). Per una storia dei distretti industriali italiani dal secondo dopoguerra agli anni novanta. In F. Barca (Ed.), Storia del capitalismo italiano dal dopoguerra ad oggi (pp. 265–333). Donzelli Editore Roma. ISBN:9788860364616.Google Scholar
- Grossman, G. M., & Helpman, E. (1991). Innovation and growth in the global economy. Cambridge, MA: MIT Press. ISBN 0-262-57097-1.Google Scholar
- ISTAT. (2013). Report—Le microimprese in Italia, Censimento dell’industria e dei servizi. http://censimentoindustriaeservizi.istat.it
- Leuven E., & Sianesi B. (2003). PSMATCH2: Stata module to perform full mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing. Statistical Software Components S432001, Boston College Department of Economics, revised February 12, 2014.Google Scholar
- Navaretti G. B., Bugamelli G., Schivardi F., Altomonte C., Horgos, D., & Maggioni D. (2011). The global operations of European firms: The second EFIGE policy report. Bruegel Bluepring Series. ISBN:978-9-078910-20-6.Google Scholar
- OECD. (2008). Enhancing the role of SMEs in global value chains. OECD Publishing. doi: 10.1787/9789264051034-en.
- OECD. (2012). Fostering SMEs’ participation in global markets: Final report. OECD Centre for SMEs, Entrepreneurship and Local Development, Paris.Google Scholar
- Park, A., Nayyar, G., & Low, P. (Eds.). (2013). Supply chain perspectives and issues: A literature review. World Trade Organization and Fung Global Institute. ISBN:978-92-870-3893-7.Google Scholar