Exploring the exporting-downsizing link: Does the type of export strategy and firm efficiency in foreign markets matter?

Abstract

This study explores the relationship between exporting strategies, firm efficiency, and downsizing. Drawing on the resource-based view, we first test whether there is a link between export intensity and the propensity of a firm to downsize. Next, we examine the impact of direct/indirect exporting strategies as well as the interactive effects of efficiency and each exporting strategy on the propensity to downsize. We use a sample of Spanish manufacturing firms between 1993 and 2016. Our findings reveal a negative effect of a firm’s level of involvement in foreign markets via exports on the propensity to downsize. Our results also show that the propensity to downsize is lower in firms using a direct export strategy and in more efficient firms opting for this strategy. However, no support for a significant association between the propensity to downsize and the use of an indirect export strategy and efficiency is observed.