Previous experience, experimentation and export survival: Evidence from firm‐product‐destination level data

Silviano Esteve‐Pérez
Authors registered in the RePEc Author Service: Silviano Esteve-Pérez

The World Economy, 2021, vol. 44, issue 9, 2638-2682

Abstract: This paper explores the role of a firm's product and/or market export experience and experimentation for survival of new product‐destination export spells, using firm‐level Spanish customs data over the period 1997–2015. Previous research has documented a positive impact of experience on export survival. This paper contributes to the extant literature by unravelling the distinct effect on export survival of ongoing accumulated experience (i.e., from the start of a product‐destination export spell), previous product and/or destination‐market experience and experimentation (repetition of product‐destination relationships). We find that 60% of new product‐country export spells end during their first year. Thereafter, the hazard rate remarkably falls with their elapsed duration (i.e., age). Exporting a new product endures a higher risk than entering a new market. Besides, experimentation (repeated product‐destination combinations) and previous experience (especially at product rather than at destination level) significantly lower the exit hazard. The results are consistent with previous studies that suggest that sunk costs to enter markets are relatively high, while experimentation and learning are more relevant at product level.

Date: 2021
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