Exit from Exporting: Does Engagement in Transnational Networks Matter?

The aim of this paper is to investigate whether the probability of ceasing exports is lower for firms that are integrated in transnational production chains, once other firm characteristics are controlled for. On the basis of the estimation of a random-effects probit model with panel data, we find that the superior characteristics of firms involved in global networks (in terms of productivity, foreign ownership and skilled labor) explain their greater resistance to losing their status as exporters. However, for small firms, even when these distinctive features are controlled for, integration in international networks plays an important role in continuing to export. Thus, it seems that small firms which participate in networks have an added advantage which enables them to confront the uncertainty of foreign markets in better conditions and translates to a lower likelihood that they will stop exporting.