Productivity vs Management: What Matters in the Export Process?

Abstract

In this paper, both a theoretical and an empirical model to study the con tribution of productivity and management practices on exporter status are presented. On the theoretical side, a multiple heterogeneity model is devel oped, where rms can di er in their levels of two di erent kinds of productivity: in cost (ϕ) and in management (ζ), in a context of monopolistic competition. With this, in the autarkic case, the model achieves two conditions (Zero Cut O Pro t Condition and Free Entry Condition) that rstly determine which rms enter and produce in the market. Then, by opening the economy to the rest of the world, the model not only shows which rms survive in the domestic market but also which ones export. Therefore, the most productive rms would not necessarily export, because export decision also depends on how e ectively rms carry out a set of management practices to adapt their product to foreign demand. On the empirical side, productivity and man agement practices at rm level are measured by using several methods and speci cations to identify their e ect on exporter status, exploiting the waves of The World Bank Enterprise Surveys of 2006, 2010 and 2017 for Argentina. The main results indicate that both productivity and management practices a ect positively the probability of being an exporter, and their e ects are very similar in magnitude. Thanks to my work, I have identi ed some particular strategies rms should mainly focus on. Indeed, I suggest that obtaining ISO certi cations, o ering training programs to employees and using services or programs to promote exports are important for being an exporter.