Économie et Statistique n° 435-436 - Internationalization of French Business Firms
Impact of Financial Constraints on French Firms' Export Performance
In the past fifteen years, a large body of literature has highlighted the differentiated characteristics of exporting firms. Our article contributes to this research by showing that exporting firms distinguish themselves from their non-exporting competitors not only because of their real characteristics-size and productivity-but also because of their financial characteristics. Accordingly, we seek to analyze the role of financial constraints as a determinant of firms' export decisions. More specifically, we try to establish the extent to which constrained access to external financing sources delays a firm's entry into export markets. We also study the extent to which participation in external trade has positive effects ex post on firms' financial health. We observe that access to financing is a significant determinant of the probability of exporting. To begin with, first-time exporters are in better financial health than their non-exporting competitors even before their entry into export markets. By contrast, we find no ex post benefits to financial health due to entry into export markets. Using duration models, we show that the firm's financial health has a positive influence-along with productivity-on the initial decision to enter a foreign market, and that the effects of the two variables are quantitatively comparable. Nevertheless, these effects are weak. In our model, export-market entry is mostly due to heterogeneity factors regarding unobserved firms.