Internationalisation and Economic Performance of Enterprises: Evidence from Polish Firm-level Data

Authors


  • We would like to thank C. Altomonte, E. Czarny, Balázs Muraközy, two anonymous referees and participants to the International Conference ‘Small Open Economies in a Globalized World’ (Wilfrid Laurier University, June 2008); International Workshop on ‘Firm and Product Heterogeneity in International Trade’ (H.U. Brussels, August 2009) for helpful comments. Special thanks are owed to J. Socha for compilation of the data. All remaining errors are ours. The views expressed are those of the authors and not necessarily of the institutions they represent.

Abstract

This article provides evidence on the relative performance of internationalised firms using Polish firm-level data, spanning the period 1996–2005 and covering all medium and large enterprises. We distinguish between three modes of internationalisation: foreign direct investment, exporting and importing of capital goods. Our results point strongly at the superior performance of foreign affiliates vs domestic firms, exporters vs non-exporters, and importers vs non-importers: internationalised firms are larger, more capital intensive, pay higher wages and are more productive than purely domestic firms. Foreign ownership is the strongest factor accounting for gains from internationalisation. The premia from exporting are substantially lower, though also significantly positive. The performance of capital goods importers is also higher compared to non-importers and is to some extent related to their involvement in other types of international activity. The results are robust to the choice of specification and productivity estimator. The analysed enterprises recorded a sizeable and broad-based productivity improvement over the period under consideration. Not only the initial levels of productivity of exporters, importers and foreign affiliates were on average significantly higher that those of their non-internationalised counterparts, but they also recorded faster productivity gains (manifested in increasing productivity premia), so that the discrepancies grew even larger. We also perform the analysis of productivity spillovers from internationalised firms onto own, downstream and upstream sectors. We find evidence of significant horizontal and backward spillovers from all three types of international activity. Our results suggest that trade externalities are rather of a horizontal nature, while those related to foreign direct investment operate mainly via backward linkages.

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