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How do UK
firms make
export
decisions?
Prof. Jun Du, Prof. Stephen Roper,
Eugenie Golubova
1
Introduction
Joint ERC-DBT project which aims to identify what factors influence
firms’ export decisions and what process the export decisions follow.
We focus on first export entry, exit & re-entry, persistence and export
changes.
 Three research elements:
 Rapid literature review (screened c. 2,800 papers, analysed 135)
 N=1,750 UK representative survey of exporters
 N=16 interviewed firms who took first entry or re-entry decisions
2
What first entry decisions do they make?
 New exporters make up 10% of the sample
 Prior to exporting, nearly half had exporting as an objective in their business plan
 First start exporting physical goods and physical services
 Top 5 first entry countries were:
 Republic of Ireland
 USA
 Netherlands
 Germany
 France
 First country choice was dictated by customer enquiries or its size & ease of access
 It mostly took firms less than a year to start exporting since they first considered it
 Less than 10% of firms had considered other forms of entering foreign markets
3
What exit and re-entry decisions do they make?
 6% are intermittent exporters
 Mostly paused exports due to
COVID-19 and lack of customer
demand, though continued business
development activities – incl. in
preparation for exporting
 Intermittent exporters respond to
customer enquiries and maintain the
status quo:
 Over 8 in 10 re-entered to export
the same goods or services
 to all the same countries or
some of the same (over 8 in 10)
4
28% 28% 28% 28% 29%
30% 29% 29% 30% 30%
20% 21%
23% 24% 24%
9% 10%
6% 7% 8%
0%
5%
10%
15%
20%
25%
30%
35%
2019 2020 2021 2022 2023
Exports as share of turnover
All Persistent New Intermittent
What persistence decisions do they make?
 85% of the all exporters
 Persistent exporters mainly keep the
status quo, though a substantial
minority expand
 Very few firms undertake other forms
of entering foreign markets
 Nearly all firms stick to their primary
mode of exporting – but they use
multiple export modes and cover more
export markets
5
62%
8%
17%
2%
7%
0%
4%
Primary mode of exporting
Direct selling to customers
Selling through domestic
intermediaries or distributors
Selling through foreign
intermediaries or distributors
Selling through contract
manufacturing and assembly
Selling through e-commerce
and online marketplaces
Other
All modes are equal
What motivates different export decisions?
93%
87%
79%
43%
30%
26%
17%
10%
7%
79%
82%
49%
27%
22%
23%
8%
3%
12%
0% 20% 40% 60% 80% 100%
To increase company profit
and growth
To respond to customer
enquiries from abroad
To re/establish/sustain
market presence
To diversify risks from
market concentration
To learn and innovate
To utilise excess capacity
To access resources
To take advantage of UK
government initiatives
To prepare for setting up
FDI overseas
Reasons to re-/start/continue to export
Persistent New Intermittent 6
62%
42% 37%
5%
5%
4%
17%
38%
41%
9% 9%
5%
1% 3%
7%
6% 2% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Primary reason All equally important
Other
To re/establish/sustain
market presence
To respond to
customer enquiries
from abroad
To prepare for FDI / UK
government initiatives
To diversify risks /
utilise excess capacity /
access resources /
learn
To increase company
profit and growth
Who makes the decisions?
 The number of export decision-
makers is similar across exporters
 Export DMs are mainly different types
of directors, heads and senior
managers
 Interviewees told us of equal or
complementary decision-making of
multiple export DMs
 Other staff also contribute to export
decisions, essentially by providing
information
27%
7%
12%
27%
8%
17%
19%
5%
13%
0%
5%
10%
15%
20%
25%
30%
Share of
women export
DMs
Share of
minority ethnic
Share of
foreign-born
Export decision-makers
Persistent New Intermittent
7
What are impacts of other stakeholders?
 Connections vary a little, but the they have a similar level of impact on export
decisions
 Firms with any foreign connections report higher impact on export decisions
 Advice or support relating to exporting also impacts export decisions
96%
49%
14%
92%
33%
13%
94%
46%
18%
0%
20%
40%
60%
80%
100%
UK business
connections
Foreign
business
Foreign
personal
Connections
Persistent New Intermittent
8
Yes
30%
No, the firm
sought, but did
not receive any
7%
No, but
the firm
did not
seek any
59%
Don’t know
4%
Did a firm receive business
advice/support for exporting?
Summary
 There is no single export decision, but rather multiple decisions at
different times for different purposes
 Customer demand is an integral part of exporting at any stage though
its perceived importance changes over time and exporting patterns
 At first, exporting decisions seem immutable; but over time, in
persisting to export, firms change how and why they export, which
we can also expect in new and intermittent exporters (if they continue)
 Multiple internal and external stakeholders feed into export decision-
making
 There is scope for export support targeted at different exporting firms
at different points in time and over time – including for persistent
exporters
9
Link to the manifesto for small business growth
and productivity
Support and encourage more firms to export
…targeting initiatives at different points in the export journey
“We need to encourage and support more small firms to export. The external
shocks and crises of Brexit and Covid-19 have had a negative impact on export
activity that has hit smaller firms the hardest, and there is an urgent need for
policy action here, given the magnitude of the impacts on businesses and the
wider economy. ERC research has shown that there are close links between
international trade, growth ambition and innovation activity. There is a clear
rationale going forward for policy action to jointly promote exporting and
innovation in UK firms, targeting firms at different points in their export
journey. This will involve action on a range of fronts, including government,
education and business representative associations.”
10

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How do UK firms make export decisions?  Eugenie Golubova

  • 1. How do UK firms make export decisions? Prof. Jun Du, Prof. Stephen Roper, Eugenie Golubova 1
  • 2. Introduction Joint ERC-DBT project which aims to identify what factors influence firms’ export decisions and what process the export decisions follow. We focus on first export entry, exit & re-entry, persistence and export changes.  Three research elements:  Rapid literature review (screened c. 2,800 papers, analysed 135)  N=1,750 UK representative survey of exporters  N=16 interviewed firms who took first entry or re-entry decisions 2
  • 3. What first entry decisions do they make?  New exporters make up 10% of the sample  Prior to exporting, nearly half had exporting as an objective in their business plan  First start exporting physical goods and physical services  Top 5 first entry countries were:  Republic of Ireland  USA  Netherlands  Germany  France  First country choice was dictated by customer enquiries or its size & ease of access  It mostly took firms less than a year to start exporting since they first considered it  Less than 10% of firms had considered other forms of entering foreign markets 3
  • 4. What exit and re-entry decisions do they make?  6% are intermittent exporters  Mostly paused exports due to COVID-19 and lack of customer demand, though continued business development activities – incl. in preparation for exporting  Intermittent exporters respond to customer enquiries and maintain the status quo:  Over 8 in 10 re-entered to export the same goods or services  to all the same countries or some of the same (over 8 in 10) 4 28% 28% 28% 28% 29% 30% 29% 29% 30% 30% 20% 21% 23% 24% 24% 9% 10% 6% 7% 8% 0% 5% 10% 15% 20% 25% 30% 35% 2019 2020 2021 2022 2023 Exports as share of turnover All Persistent New Intermittent
  • 5. What persistence decisions do they make?  85% of the all exporters  Persistent exporters mainly keep the status quo, though a substantial minority expand  Very few firms undertake other forms of entering foreign markets  Nearly all firms stick to their primary mode of exporting – but they use multiple export modes and cover more export markets 5 62% 8% 17% 2% 7% 0% 4% Primary mode of exporting Direct selling to customers Selling through domestic intermediaries or distributors Selling through foreign intermediaries or distributors Selling through contract manufacturing and assembly Selling through e-commerce and online marketplaces Other All modes are equal
  • 6. What motivates different export decisions? 93% 87% 79% 43% 30% 26% 17% 10% 7% 79% 82% 49% 27% 22% 23% 8% 3% 12% 0% 20% 40% 60% 80% 100% To increase company profit and growth To respond to customer enquiries from abroad To re/establish/sustain market presence To diversify risks from market concentration To learn and innovate To utilise excess capacity To access resources To take advantage of UK government initiatives To prepare for setting up FDI overseas Reasons to re-/start/continue to export Persistent New Intermittent 6 62% 42% 37% 5% 5% 4% 17% 38% 41% 9% 9% 5% 1% 3% 7% 6% 2% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Primary reason All equally important Other To re/establish/sustain market presence To respond to customer enquiries from abroad To prepare for FDI / UK government initiatives To diversify risks / utilise excess capacity / access resources / learn To increase company profit and growth
  • 7. Who makes the decisions?  The number of export decision- makers is similar across exporters  Export DMs are mainly different types of directors, heads and senior managers  Interviewees told us of equal or complementary decision-making of multiple export DMs  Other staff also contribute to export decisions, essentially by providing information 27% 7% 12% 27% 8% 17% 19% 5% 13% 0% 5% 10% 15% 20% 25% 30% Share of women export DMs Share of minority ethnic Share of foreign-born Export decision-makers Persistent New Intermittent 7
  • 8. What are impacts of other stakeholders?  Connections vary a little, but the they have a similar level of impact on export decisions  Firms with any foreign connections report higher impact on export decisions  Advice or support relating to exporting also impacts export decisions 96% 49% 14% 92% 33% 13% 94% 46% 18% 0% 20% 40% 60% 80% 100% UK business connections Foreign business Foreign personal Connections Persistent New Intermittent 8 Yes 30% No, the firm sought, but did not receive any 7% No, but the firm did not seek any 59% Don’t know 4% Did a firm receive business advice/support for exporting?
  • 9. Summary  There is no single export decision, but rather multiple decisions at different times for different purposes  Customer demand is an integral part of exporting at any stage though its perceived importance changes over time and exporting patterns  At first, exporting decisions seem immutable; but over time, in persisting to export, firms change how and why they export, which we can also expect in new and intermittent exporters (if they continue)  Multiple internal and external stakeholders feed into export decision- making  There is scope for export support targeted at different exporting firms at different points in time and over time – including for persistent exporters 9
  • 10. Link to the manifesto for small business growth and productivity Support and encourage more firms to export …targeting initiatives at different points in the export journey “We need to encourage and support more small firms to export. The external shocks and crises of Brexit and Covid-19 have had a negative impact on export activity that has hit smaller firms the hardest, and there is an urgent need for policy action here, given the magnitude of the impacts on businesses and the wider economy. ERC research has shown that there are close links between international trade, growth ambition and innovation activity. There is a clear rationale going forward for policy action to jointly promote exporting and innovation in UK firms, targeting firms at different points in their export journey. This will involve action on a range of fronts, including government, education and business representative associations.” 10