The Role of Foreign Networks for Firm Export of Services

Andreas Hatzigeorgiou () and Magnus Lodefalk
Additional contact information
Andreas Hatzigeorgiou: The Ratio Institute, Postal: Ratio, Box 3203, SE - 103 64 Stockholm, Sweden, http://ratio.se/medarbetare/andreas-hatzigeorgiou/

No 2015:6, Working Papers from Örebro University, School of Business

Abstract: This study formalizes the idea that that the world can become ‘smaller’ through firms’ strategic trade-related decisions. We investigate whether firm investment in obtaining access to foreign networks impacts exports of services by estimating a fixed effects panel model on a comprehensive firm-level dataset for Sweden. In particular, we examine investment in links through the hiring of immigrants. Because trade barriers are higher for services than for goods, and because trade in services is more sensitive to informal trade barriers, firm investment in access to foreign networks could especially help to increase services exports. However, investment in foreign links could benefit overall access within the same cluster of firms, which reduces the incentive for an individual firm to invest in such linkages itself. The novel results suggest a positive and significant influence of firm investment in foreign networks – through the hiring of foreign-born workers – on both the propensity to export services as well as the intensity of exports. Instrumental variable estimation mitigates endogeneity concerns. Weaker export experience enhances the role of investment in foreign networks in terms of the propensity to export. The skill level of foreignborn workers and the time that has elapsed since immigration also impact the degree to which firms can utilize investment in foreign-born personnel to gain access to networks abroad. Our findings provide a new understanding of how firms can overcome trade barriers that specifically impede services by investing in foreign networks, such as through hiring foreign-born personnel, and emphasize the role of foreign-born population to promote services exports.

Keywords: networks; firms; trade; services; immigration (search for similar items in EconPapers)
JEL-codes: D80 F10 F22 J61 L14 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2015-06-29
New Economics Papers: this item is included in nep-bec, nep-cse, nep-int, nep-mig and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.oru.se/globalassets/oru-sv/institution ... rs2015/wp-6-2015.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:oruesi:2015_006

Access Statistics for this paper

More papers in Working Papers from Örebro University, School of Business Örebro University School of Business, SE - 701 82 ÖREBRO, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by ().