Does exporting make firms more productive, or do more productive firms choose to become exporters? This paper considers the link between exporting and productivity for a sample of firms in US business services. We find that larger, more productive firms are more likely to become exporters, but that these factors do not necessarily influence the extent of exporting. This conforms with previous literature that there is a self-selection effect into exporting. We then test for the effect of exporting on productivity levels after allowing for this selection effect. We model both the relationship between exporting and productivity, and a simultaneous relationship between export intensity and productivity after allowing for selection bias. In both cases we find an association, indicating that productivity is positively linked both to exporting and to increased exposure to international markets.
Bibliographical noteNOTICE: this is the author’s version of a work that was accepted for publication in International business review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Love, JH & Mansury, MA, 'Exporting and productivity in business services: evidence from the United States' International business review, vol. 18, no. 6 (2009) DOI http://dx.doi.org/10.1016/j.ibusrev.2009.08.002
- business services
- United States