Ruhr Economic Papers

Ruhr Economic Papers #192

The Asymmetries of a Small World: Entry Into and Withdrawal From International Markets by French Firms

by Dirk Engel, Vivien Procher and Christoph M. Schmidt

RWI, RGS Econ, 06/2010, 31 S./p., 8 Euro, ISBN 978-3-86788-216-3

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Abstract

This paper studies the internationalization behaviour of French companies, using more than 330.000 observations for three two-year intervals. We analyze the role of productivity, organisational and ownership structure, and of financial characteristics for the decision to enter into and exit from foreign markets. High levels of productivity are documented to be characteristic of companies deciding to engage in exporting or foreign direct investment (FDI). However, there does not seem to be a significant correlation between productivity and divestment decisions. Moreover, companies with corporate shareholders are more likely to intensify their international engagement and to retain their cross-border activities. Finally, with some exceptions high levels of short-term and long-term debt tend to make entry into a more intense international engagement more and its reduction less likely.

JEL-Classification: F23, D21, L21, C25

Keywords: Foreign markets; entry and exit; exporting; FDI

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