Performance of small- and medium-sized enterprises in services trade: evidence from French firms
This paper empirically investigates the key firm- and industry-specific restrictions to the performance of small- and medium-sized enterprises (SMEs) in services trade. For this purpose, we use firm-level data from firms in France operating in different services sectors over the time period 1998–2007 and formulate two-part models consisting of (1) (dynamic) export equations and (2) (dynamic) export share equations. Our results confirm the view that a relatively low share of SMEs engages in services trade. In line with the new-new trade theory, our results also corroborate that more productive SMEs have a higher export probability. The key finding of this paper is that the export decisions of SMEs in services sectors are estimated to be extremely persistent, implying that trade policy efforts, including the allocation of scarce trade promotion budgets, should be directed at addressing the barriers faced in establishing the first export operation. Finally, our sub-sectoral estimates reveal considerable heterogeneity across different types of services.
KeywordsInternationalization Services trade Small- and medium-sized enterprises Export activities Dynamic export questions
JEL ClassificationsC23 C25 F14 F23 L26 L80 L90
We would like to thank Rui Baptista, two anonymous referees, the participants of the 5th FIW research conference in International Economics at the Vienna University of Economics and Business, the participants of the FIW-WIIW research seminar in International economics, and the participants of the Inter-American Development Bank-ELSNIT XI Annual Conference on “Internationalisation of SMEs.” The authors also thank the OECD Working Party of the Trade Committee and the OECD Working Party on SMEs and Entrepreneurship for useful comments and discussions.
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