Firms' Productivity and Internationalisation Choices: Evidence for a Large Sample of Italian Firms

Centro Studi Luca d'Agliano Development Studies Working Paper No. 236

29 Pages Posted: 11 Dec 2008

See all articles by Luigi Benfratello

Luigi Benfratello

University of Turin - Department of Economics and Financial Sciences G. Prato; CERIS-CNR

Tiziano Razzolini

University of Siena

Date Written: Jaunuary 2008

Abstract

This paper provides evidence on the links between productivity and internationalisation choices for a large sample of both large and small-medium sized Italian firms. By using detailed qualitative and quantitative information we first identify those firms engaged in international activities through exports and/or horizontal FDIs. Following the empirical literature on firm heterogeneity we estimate different measures of Total Factor Productivity and we provide empirical support to the theoretical predictions that there is a productivity ranking among domestic firms, exporters, and FDI performers. By estimating a multinomial logit model, we also control for the effect of variables other than TFP such as size, innovative activity, age, ICT adoption, labour composition, and group membership. As these variables only partially capture the effect of productivity on the probability to engage in foreign markets, we find that the ranking is robust with respect to the inclusion of these additional firm-level characteristics.

Keywords: FDI, Productivity, Export, Firm heterogeneity, Multinominal logit

JEL Classification: D24, F14, F23, C35

Suggested Citation

Benfratello, Luigi and Razzolini, Tiziano, Firms' Productivity and Internationalisation Choices: Evidence for a Large Sample of Italian Firms (Jaunuary 2008). Centro Studi Luca d'Agliano Development Studies Working Paper No. 236, Available at SSRN: https://ssrn.com/abstract=1313707 or http://dx.doi.org/10.2139/ssrn.1313707

Luigi Benfratello (Contact Author)

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy
+39 011 6706072 (Phone)
+39 011 6706062 (Fax)

CERIS-CNR ( email )

Italy

Tiziano Razzolini

University of Siena ( email )

Via Banchi di Sotto, 55
Siena, 53100
Italy
+393493277244 (Phone)

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