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The ladder of internationalization modes: evidence from European firms

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  • Gábor Békés

    (Central European University
    Centre for Economic and Regional Studies of the Hungarian Academy of Sciences
    CEPR)

  • Balázs Muraközy

    (Centre for Economic and Regional Studies of the Hungarian Academy of Sciences)

Abstract

How do firms enter international markets? To answer this question, this paper uses a unique multi-country firm-level dataset which, besides direct exporting and FDI, provides explicit information on a number of internationalization modes: indirect exporting, outsourced manufacturing and service FDI. We present a theoretical framework in which modes requiring higher and higher commitment have progressively higher fixed and lower marginal costs. By estimating multinomial and ordered logit models, we present evidence in line with such a sorting framework with respect to TFP and innovativeness. We identify three ’clusters’ of modes: indirect exporters are similar to non-exporters, direct exporters and outsourced manufacturers constitute a second cluster while service and manufacturing FDI are the most demanding internationalization modes.

Suggested Citation

  • Gábor Békés & Balázs Muraközy, 2018. "The ladder of internationalization modes: evidence from European firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(3), pages 455-491, August.
    • Handle: RePEc:spr:weltar:v:154:y:2018:i:3:d:10.1007_s10290-018-0305-9
    DOI: 10.1007/s10290-018-0305-9
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    Cited by:

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    2. Nucci, Francesco & Pietrovito, Filomena & Pozzolo, Alberto Franco, 2023. "Intermediated trade and credit constraints: The case of firm’s imports," International Economics, Elsevier, vol. 175(C), pages 201-220.
    3. A. V. Tedeeva, 2018. "Identification of the Global Strategic Trends Defining of Foreign Direct Investments Development," Administrative Consulting, Russian Presidential Academy of National Economy and Public Administration. North-West Institute of Management., issue 6.

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    More about this item

    Keywords

    Firm heterogeneity; Self-selection; Sorting; Export; FDI; Internationalization mode; Ordered logit;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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