Disentangling barriers to internationalization |
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Authors: | Christian Arndt Claudia M Buch Anselm Mattes |
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Institution: | 1. Department of Economics, Nürtingen University;2. Department of Economics, University of Tübingen;3. DIW econ, Berlin |
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Abstract: | Abstract. Recent literature on multinational firms has focused on low productivity as a barrier to the internationalization of firms. But labour market frictions or financial constraints may also hamper internationalization. In order to assess the importance of these barriers, we present new empirical evidence on the extensive and intensive margin of exports and foreign direct investment (FDI) based on micro‐level data of German firms. First, we find a positive impact of firm size and productivity on firms’ international activities. Second, labour market frictions can constitute barriers to foreign activities. Third, self‐reported financial constraints have no impact on firms’ internationalization decisions. JEL classification: F23, G2 |
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