Self-selection vs learning: evidence from Indian exporting firms

Abstract

Purpose – The purpose of this paper is to study whether exporting firms outperform non-exporting firms along a number of performance characteristics. It also examines whether the differences in performance characteristics are due to the self-selection of better firms into exporting or because the firms that start exporting for some unknown reason experience productivity growth. Design/methodology/approach – The dataset comprised a panel of Indian manufacturing firms for a period of 17 years from 1990 to 2006. Findings – Exporters were found to systematically outperform non-exporters over a number of characteristics. Also, evidence was found of “self-selection”, that is, firms that are more productive enter the export market. There was some evidence of learning, that is exporting firms experience an increase in productivity. Originality/value – This is the first paper to look at the issue of self-selection vs learning for exporting firms using a dataset from India.Exports, India, Manufacturing industry, Productivity rate