Does the pursuit of more complex products contribute to the productivity of exporting firms?

Does the pursuit of more complex products contribute to the productivity of exporting firms? PurposeThe purpose of this paper is to contribute to the literature on learning by exporting by investigating whether an increase in the complexity of exported products contributes to higher productivity at the firm level.Design/methodology/approachThe study implements an empirical analysis for Estonian manufacturing firms involved in exporting for the period 2008–2014, adding product complexity as an explanatory variable in the production function estimation. An increase in product complexity is interpreted as an indirect proxy for an increase in firm capabilities, capturing both tangible and intangible elements of competitiveness and reflecting the learning effects.FindingsA relatively weak correlation between product complexity and productivity was found using a simple OLS estimation – exporters with higher product complexity have generally higher productivity levels. Somewhat surprisingly, no evidence for the learning by exporting was found among exporters, meaning that the increased complexity does not seem to be a channel for productivity upgrading. This result seems to be robust, irrespective of estimation methods and sampling preferences.Research limitations/implicationsThe sample is representative of exporting firms.Practical implicationsThe results show that the pursuit to more complex product does not necessarily contribute to productivity for exporting firms. The findings suggest that the firm-level upgrading due to increased export orientation is likely to take place through the other channels like moving up in global value chains and differentiating by product quality.Originality/valueThis is one of the first papers to investigate the effect of product complexity on productivity at a firm level. The results provide new insights into the learning-by-exporting hypothesis, with focus on potential learning among the existing exporters. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

Does the pursuit of more complex products contribute to the productivity of exporting firms?

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0143-7720
D.O.I.
10.1108/IJM-03-2018-0092
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to contribute to the literature on learning by exporting by investigating whether an increase in the complexity of exported products contributes to higher productivity at the firm level.Design/methodology/approachThe study implements an empirical analysis for Estonian manufacturing firms involved in exporting for the period 2008–2014, adding product complexity as an explanatory variable in the production function estimation. An increase in product complexity is interpreted as an indirect proxy for an increase in firm capabilities, capturing both tangible and intangible elements of competitiveness and reflecting the learning effects.FindingsA relatively weak correlation between product complexity and productivity was found using a simple OLS estimation – exporters with higher product complexity have generally higher productivity levels. Somewhat surprisingly, no evidence for the learning by exporting was found among exporters, meaning that the increased complexity does not seem to be a channel for productivity upgrading. This result seems to be robust, irrespective of estimation methods and sampling preferences.Research limitations/implicationsThe sample is representative of exporting firms.Practical implicationsThe results show that the pursuit to more complex product does not necessarily contribute to productivity for exporting firms. The findings suggest that the firm-level upgrading due to increased export orientation is likely to take place through the other channels like moving up in global value chains and differentiating by product quality.Originality/valueThis is one of the first papers to investigate the effect of product complexity on productivity at a firm level. The results provide new insights into the learning-by-exporting hypothesis, with focus on potential learning among the existing exporters.

Journal

International Journal of ManpowerEmerald Publishing

Published: Sep 2, 2019

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