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Barriers to Internationalization: Firm-Level Evidence from Germany

Author

Listed:
  • Christian Arndt
  • Claudia Buch
  • Anselm Mattes

Abstract

Exporters and multinationals are larger and more productive than their domestic counterparts. In addition to productivity, financial constraints and labor market constraints might constitute barriers to entry into foreign markets. We present new empirical evidence on the extensive and intensive margin of exports and FDI based on detailed micro-level data of German firms. Our paper has three main findings. First, in line with earlier literature, we find a positive impact of firm size and productivity on firms’ international activities. Second, small firms suffer more frequently from financial constraints than bigger firms, but financial conditions have no strong effect on internationalization. Third, labor market constraints constitute a more severe barrier to foreign activities than financial constraints. Being covered by collective bargaining particularly impedes international activities.

Suggested Citation

  • Christian Arndt & Claudia Buch & Anselm Mattes, 2009. "Barriers to Internationalization: Firm-Level Evidence from Germany," IAW Discussion Papers 52, Institut für Angewandte Wirtschaftsforschung (IAW).
    • Handle: RePEc:iaw:iawdip:52
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    File URL: http://www.iaw.edu/RePEc/iaw/pdf/iaw_dp_52.pdf
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    References listed on IDEAS

    as
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    10. Berman, Nicolas & Héricourt, Jérôme, 2010. "Financial factors and the margins of trade: Evidence from cross-country firm-level data," Journal of Development Economics, Elsevier, vol. 93(2), pages 206-217, November.
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    Citations

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    Cited by:

    1. Megbel Aleidan, 2018. "A Correlational Analysis to Assess Major Obstacles Associated with the Internationalization of Saudi Startup Enterprises," International Business Research, Canadian Center of Science and Education, vol. 11(12), pages 78-88, December.
    2. Julian di Giovanni & Andrei A. Levchenko, 2012. "Country Size, International Trade, and Aggregate Fluctuations in Granular Economies," Journal of Political Economy, University of Chicago Press, vol. 120(6), pages 1083-1132.
    3. Strasser, Georg, 2013. "Exchange rate pass-through and credit constraints," Journal of Monetary Economics, Elsevier, vol. 60(1), pages 25-38.
    4. Philippe Askenazy & Aida Caldera & Guillaume Gaulier & Delphine Irac, 2015. "Financial constraints and foreign market entries or exits: firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 231-253, May.
    5. Christian Arndt & Claudia M. Buch & Anselm Mattes, 2009. "Firm-Specific Factor Market Constraints and FDI: Evidence from Germany," Development Working Papers 269, Centro Studi Luca d'Agliano, University of Milano.
    6. Li Junjiang & Hou Lei & Zhang Jiarui, 2011. "Capital endowment, credit constraint and FDI: Analysis based on heterogeneous firms," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(1), pages 55-75, March.
    7. Peter H. Egger & Michaela Kesina, 2014. "Financial Constraints and the Extensive and Intensive Margin of Firm Exports: Panel Data Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 625-639, November.
    8. Pietrasieñski Pawe³ & Œlusarczyk Beata, 2015. "Internationalization Of Small And Medium Enterprises – Empirical Research Review On Barriers To Entry Into Foreign Markets," Polish Journal of Management Studies, Czestochowa Technical University, Department of Management, vol. 11(1), pages 113-123, June.

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    More about this item

    Keywords

    foreign direct investment; exports; firm heterogeneity; productivity; financial constraints; labor market constraints;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • G2 - Financial Economics - - Financial Institutions and Services

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