Project Inception presentation for ERC Project 6. Productivity and internationalisation in SMEs.

1. Exporting and
Performance in SMEs
December 2016-May 2017
Jim Love
Stephen Roper
Areti Gkypali

2. Background
• It is widely recognized that internationalisation is
important to fulfil and sustain growth potential,
especially for SMEs.
• Yet, evidence suggests that for many SMEs, exporting is
often a rather opportunistic and episodic activity,
rather than a continuous process.
• Building on previous ERC work on the determinants of
intermittent exporting and learning by exporting this
project examines how different patterns in export
volume, product and destination impact on SME
performance (growth and productivity).

3. Recent ERC analysis
• Determinant of intermittent exporting (export
exit and re-entry) French data
• Firms with a low exit probability also have a high likelihood of re-entry, and
vice versa.
• smaller and less productive firms react much more strongly to changes in both
domestic and foreign market growth than larger firms in terms of exit.
• Conditions in domestic and foreign markets around the time of re-entry have
little effect on the probability of re-entry.
• BUT market conditions at the time of exit – and how the firm reacted to these
– matter greatly in determining the likelihood of re-entry.
• So strategic rationale for exit greatly affect re-entry .

4. Recent ERC analysis
• Determinants of duration of exporting spells
(Spanish data)
• Cumulative export experience lengthens subsequent exporting spells
• This is compromised by ‘punctuated learning’ arising from sporadic exporting
experience
• Largely an SME effect
Links to previous analysis on export exit and re-entry :
• firms with a history of repeated entry and exit from exporting will tend to have
shorter exporting spells in the future than identical firms with accumulated
experience arising from continuous exporting
• intermittent exporting in the past leads to intermittent exporting in the future
because of the different pattern of accumulated previous learning

5. What we want to know
1. How different patterns of exporting affect firm
performance
• How does sporadic/intermittent exporting affect
growth and productivity?
• Is ‘learning-by-exporting’ different for intermittent
exporters? Does it matter where you export to?
• What role does early internationalisation play here?

6. What we want to know
2. Exporting, innovation and productivity
• How do innovation and exporting work together to
promote sales and productivity growth in UK small
businesses?
• How does these relationships differ between sub-
groups of businesses defined by age, ownership type
(e.g. women-owned, family-owned)?
• What influence does public support for innovation and
exporting have on these relationships? What are the
relative rates of return from supporting innovation and
exporting?

7. Analysis 1: Longitudinal Small
Business Survey (waves 1 & 2)
• The LSBS provides a rich source of both innovation and exporting data in Year
1 and longitudinal performance data for Year 1 and Year 2.
• The LSBS therefore creates the potential to generate new insights into how
innovation and exporting combine to enable firms to growth their sales or
productivity.
• The breadth of sectoral, geographical and size coverage in the LSBS along
with the ability to focus on sub-groups of businesses defined by age,
ownership type (e.g. women-owned, family-owned) will also allow us to explore
these relationships for sub-groups of businesses.
• From a policy perspective the LSBS survey also provides information on
whether firms received both innovation and export support. This will enable us
to model directly whether the receipt of support in Year 1 influences innovation
and exporting and subsequently growth and productivity performance.

8. Analysis 2: HMRC export data +
Business Structure Database
• Building export histories
This phase of the project will focus on building export histories of UK
SMEs using the customs and trade databases. For each firm this will
involve data on product category, value, year and national market. This
will provide new insights into the nature of export development in SMEs
and whether there is evidence of learning effects as firms move from local
to more challenging distant export markets. Questions of intermittent and
persistent exporting can also be considered.
• Comparing exporting and performance time series
Export histories will be combined with performance data from the HMRC
Corporation Tax dataset and VAT datasets to examine the timing and
causal influence of exporting on performance. This will allow us to
consider issues such as early internationalisation and intermittent
exporting.

9. Comments and questions?