Financial Constraints and Firm Export Behaviour


  • The authors blame each other for any remaining mistakes. They nevertheless agree on the need to thank Sylvain Barde, Jean-Luc Gaffard, Sarah Guillou, Mauro Napoletano and Evens Salies for insightful conversations. Seminar participants at GREDEG, University of Trento, the 2nd ACE International Conference in Hong Kong, the ISGEP Workshop in Nottingham, the 12th International Schumpeter Society Conference in Rio de Janeiro, the 10th ETSG Conference in Warsaw, and the DIME Workshop ‘The Dynamics of Firm Evolution: Productivity, Profitability and Growth’ in Pisa provided us with valuable comments on earlier drafts. Joachim Wagner and two anonymous referees helped us to greatly improve the paper.


The paper analyses the link between financial constraints and firm export behaviour. Our main finding is that firms enjoying better financial health are more likely to become exporters. The result contrasts with the previous empirical literature which found evidence that export participation improves firm financial health, but not that export starters display any ex ante financial advantage. On the contrary, we find that financial constraints act as a barrier to export participation. Better access to external financial resources increases the probability to start exporting and also shortens the time before firms decide to serve foreign customers. This finding has important policy implications as it suggests that, in the presence of financial market imperfections, public intervention can be called for to help efficient but financially constrained firms to overcome the sunk entry costs into export markets and expand their activities abroad.