Do domestic market characteristics influence firms' export intensity?

Abstract

PurposeThe purpose of this study is to analyze the influence of the firms' external environment on their export intensity. More specifically, it assesses whether domestic market characteristics such as domestic demand and general export environment related to tradability across borders affect firms' export intensity.Design/methodology/approachThe authors use a sample of 29,266 firms from nine European countries, for the period of 2010–2016, and test several estimation methods (random effects models, Tobit models, and Heckman's selection models).FindingsResults show that external factors such as domestic demand and ease of trade across borders are important determinants of firms' export intensity. Moreover, results reveal that firm's internal characteristics such as age, size and productivity also play an import role.Originality/valueStudies about the influence of the firms' external environment on firms' export intensity are scarce because most of them are confined to a single country context. In this way, the present study contributes to the body of knowledge on the influence that external factors can have on firms' export performance by analyzing firms from nine European countries, which has important policy implications.