The impact of internet platform usage on firms' exports: New evidence for Turkish firms

Abstract

AbstractIn the last decade, the key driver of e‐commerce growth has been the expansion of internet access. Studies indicate that the internet is transforming both the production and consumption of goods and services in the domestic and international markets. Internet platform usage has significantly decreased the barriers for firms to communicate with foreign clients and suppliers on their international market participation. Using the internet platform for marketing intelligence enables firms to access information about the external environment at a faster rate and lower cost. Thus, this paper adds to the limited literature by examining how using the internet platform can affect firms' export propensity and intensity by using the World Bank's Enterprise Survey dataset for Turkey. I use a theoretical framework introduced by Melitz (2003; Econometrica, 71, 1695) to identify the export difference between a firm that uses the internet platform and a firm that does not. I also add that fixed cost of internet adoption is firm specific due to heterogeneity in the firm's ability to access the internet. Results show that internet platform usage types have a positive impact on both the likelihood of exports and export intensity. These results are robust after controlling for the endogeneity in the telecommunication costs.