Firms’ Strategic Responses to Non-Tariff Measures: The Case of Malaysian Exporters

This paper examines strategic responses by exporters to non-tariff measures (NTMs) in major export destinations, based on a newly constructed representative firmlevel survey. The responses are examined for exporting firms, with differing levels of trading intensities, given prior evidence that NTMs disproportionately affect exporters. The assessment accounts for products and structural characteristics of the exporting firm, namely size, ownership and age of firm. The key findings of the study show that most firms choose to comply with the NTMs. Of concern, is, irrespective of the response strategy, the general approach taken by these exporters is largely reactive. Further, the most negative approach, which is a combination of ‘exit’ and ‘reactive’, is prevalent among the resource-based, small-sized and young firms that are Malaysian-owned, relative to their counterparts within the different groups of exporters. The findings of the study bring to the fore the importance of capacity building for firms to maximise their strategic options through a proactive approach, and for engaging more exporters to use the ‘voice’ strategy.