The creation of sale structures abroad (CSSA) is an important intermediate stage in the process of internationalisation when firms are small and foreign direct investments entail high sunk costs. This paper investigates the determinants of this form of internationalisation and its correlation with firm productive efficiency on a large sample of small and medium sized firms for which it represents the most advanced form of access to foreign markets. It finds that ownership concentration (technological innovation, size and age) negatively (positively) affect the CSSA decision and that, after controlling for the effect of access to foreign markets under the form of exports, CSSA firms are significantly more efficient than the control sample when efficiency is measured with a stochastic frontier approach. The result on ownership structure is consistent with the following theoretical interpretations: i) ownership concentration reduces wealth diversification of the control group and leads to underinvestment in risky activities (Saint Paul, 1992; Zhang, 1998) and ii) ownership concentration increases the exercise price of the CSSA when this is viewed as a real option with the effect of raising the threshold over which closely held firms opt for this form of internationalisation. Ownership concentration seems therefore to have two offsetting effects on efficiency, on one side, it increases participation to profits and therefore incentives to perform well, while, on the other side, it leads controlling shareholders to underinvest in risky ventures (such as internationalisation) reducing opportunities for further efficiency gains.
Becchetti, L., & Santoro, M. (2000). The determinants of small-medium firm internationalisation and its effects on productive efficiency.
|Citazione:||Becchetti, L., & Santoro, M. (2000). The determinants of small-medium firm internationalisation and its effects on productive efficiency.|
|Settore Scientifico Disciplinare:||Settore SECS-P/08 - Economia e Gestione delle Imprese|
|Data di pubblicazione:||set-2000|
|Titolo:||The determinants of small-medium firm internationalisation and its effects on productive efficiency|
|Autori:||Becchetti, Leonardo;Santoro, Marika|
|Appare nelle tipologie:||99 - Altro|