Financial Constraints and Firm Export Behavior

29 Pages Posted: 19 Feb 2009

See all articles by Flora Bellone

Flora Bellone

GREDEG-CNRS ; ISEM-University of Nice-Sophia-Antipolis

Patrick Musso

Université de Nice Sophia Antipolis - Groupe de Recherche en Droit, Economie et Gestion (GREDEG)

Lionel Nesta

University of Sussex

Stefano Schiavo

University of Trento - Department of Economics and Management; OFCE

Date Written: February 13, 2009

Abstract

The paper analyzes the link between financial constraints and firm export behavior. Our main finding is that firms enjoying better financial health are more likely to become exporters. The result contrasts with the previous empirical literature which found evidence that export participation improves firm financial health, but not that export starters display any ex-ante financial advantage. On the contrary, we find that financial constraints act as a barrier to export participation. Better access to external financial resources increases the probability to start exporting and also shortens the time before firms decide to serve foreign customers. This finding has important policy implications as it suggests that, in presence of financial markets imperfections, public intervention can be called for to help efficient but financially constrained firms to overcome the sunk entry costs into export markets and expand their activities abroad.

Keywords: Export, Firm heterogeneity, Financial constraints, Sunk costs

JEL Classification: G32, F14, L25, D92

Suggested Citation

Bellone, Flora and Musso, Patrick and Nesta, Lionel and Schiavo, Stefano, Financial Constraints and Firm Export Behavior (February 13, 2009). Available at SSRN: https://ssrn.com/abstract=1342342 or http://dx.doi.org/10.2139/ssrn.1342342

Flora Bellone

GREDEG-CNRS ( email )

250 rue Albert Einstein
Sophia-Antipolis, 06560
France
(00 33) 4 93 95 43 51 (Phone)
(00 33) 4 93 65 37 98 (Fax)

HOME PAGE: http://hp.gredeg.cnrs.fr/Flora_Bellone/

ISEM-University of Nice-Sophia-Antipolis ( email )

Campus Saint-jean d'Angely 24 av des diables Bleu
Nice, 06050
France

HOME PAGE: http://unice.fr/isem

Patrick Musso

Université de Nice Sophia Antipolis - Groupe de Recherche en Droit, Economie et Gestion (GREDEG) ( email )

250, rue Albert Einstein
Valbonne, 06560
France

Lionel Nesta

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

Stefano Schiavo (Contact Author)

University of Trento - Department of Economics and Management ( email )

via Inama, 5
Trento, 38100
Italy

OFCE

Valbonne, 06560
France

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