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Licensed Unlicensed Requires Authentication Published by De Gruyter January 29, 2015

Using Stepping Stones to Enter Distant Export Markets

Arjan Lejour EMAIL logo and Harold Creusen
From the journal Global Economy Journal

Abstract

This paper analyses firms’ export entry decisions and their subsequent expansion to other export markets using Dutch firm-level international transaction data. In particular new exporters increase quickly the distance between their export markets and their home country. They are also going to export to countries in which the institutional and regulatory quality is lower. We show that firms follow a stepping stone approach for learning to export and to enter distant markets. The probability to enter a market at 1,000 km from the Netherlands increases by about 25% if the firm already exports to a market at 500 km from the new one.

JEL Classification: F10; D22; F13

Acknowledgements

The firm and international transaction data are provided by Statistics Netherlands. We are very grateful for this effort. We thank Fred Kuijpers (CPB) and Harry Habets (Statistics Netherlands) for their assistance and help to match the data sets. In particular, we thank Roger Smeets (Rutgers business school) for fruitful discussions on the stepping stone strategy. The participants at the FREIT conference in Ljubljana, 2011, ETSG conference in Copenhagen, 2011, and the EEA congress in Malaga, 2012, provided us with very helpful suggestions. As usual, only the authors bear responsibility for the contents of this paper and any remaining errors.

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Published Online: 2015-1-29
Published in Print: 2015-3-1

©2015 by De Gruyter

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