Strategic hedging: Evidence from Brazilian exporters |
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Institution: | 1. LP2M2E, Faculté des Sciences et Techniques, Université Cadi Ayyad, Gueliz, BP 549 , Marrakech, Maroc;2. CNRS-PROMES Tecnosud, Rambla de la Thermodynamique, 66100 Perpignan, France |
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Abstract: | How and why do exporters adjust their portfolios of destination countries in response to exchange rate movements? How do such geographic export diversification choices affect firm performance? Drawing on the corporate strategy and international business literature, we argue that firms enjoying low exchange rate competitiveness can increase their performance by expanding their exports to different world regions and vice versa. Studying a panel of Brazilian exporters during the years 2001–2010 and using a system of moderated mediation models with firm, industry and period fixed effects, we find that unrelated geographic diversification of exports is more effective than related diversification in counteracting exchange rate pressures. |
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Keywords: | Exports Geographic diversification Relatedness Panel regression analysis Real exchange rates |
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