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The Role of Export Market Participation in the Choice of Organizational Form of Production Technology

Authors


  • I thank Werner Antweiler, Matilde Bombardini, April Cai, Brian Copeland, Gilles Duranton, Vadim Marmer, Aneesh Murali Mohan, Deniel Trefler, conference and seminar participants in the CEA, EEA, University of British Columbia, University of Toronto, and two referees for helpful comments.

Abstract

This paper shows that the reason for a higher capital–labour ratio, observed for exporting firms, is a higher capital intensity of their production technology. Exporters choose to use different organizational forms of their production process, in which the share of capital and intermediate inputs in the final output is higher than that of non-exporters. The organization of the production process is part of the firm's organizational strategy, which generates within-industry heterogeneity in factor intensities and production technologies. The results of this study indicate that the decision to export is preceded by a process of restructuring production technology, which then has the effect of increasing a firms’ productivity and in so doing prepares them for competition in the global market.

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