The Role of Experience in Export Market Entry: Evidence for UK Firms

Abstract

The recent literature on firm exporting behaviour has pointed out to sunk-cost as key determinant of export behaviour yet little insight into what they include or how they vary with experience. In this paper we provide fresh evidence on the barriers to exporting and the role of export experience and other firm-level characteristics. Our results indicate that experience matters but in a non-linear manner. The sunk-costs of exporting initially rise with experience. Overall; these results suggest the existence of a process of learning by doing whereby firms learn how to cope with export barriers through direct experience in export markets.

Keywords: exports experience, exports barriers, productivity, sunk costs

JEL Classification: D21, F14