Location, industrial concentration and the propensity of small US firms to export

Abstract

Purpose – To examine the effects of urbanization and industrial concentration on the propensity of firms to export, and to determine whether these aspects of geography affect smaller firms differently than larger ones. Design/methodology/approach – Based on expectations from economic geography and organizational learning theories, logistic regression was used to assess the effects of firm size, urbanization and industrial concentration on the export choices of 43,707 manufacturing firms located in the Southeastern USA. Findings – Results indicate that geography affects choices to export, and that these choices differ with firm size. The smallest manufacturers (fewer than 20 employees) were most likely to export from urban areas and in concentrated industrial sectors. Industry-specific differences were also found. Research limitations/implications – Results from the Southeastern USA are consistent with findings from China, though caution should be used in generalizing from these findings. The findings suggest that both internal and external scale economies must be considered in order to understand the export success of small firms. Practical implications – These findings suggest that factors external to the firm affect the learning and decision process of smaller firms in very different ways than larger firms. Small firms are more dependent on their geographic environments than larger firms, when engaging the global economy. Originality/value – This is the first paper to examine the simultaneous effects of internal and external scale economies on the propensity of firms (and particularly small firms) to engage in export activities.