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Globalization drives strategic product switching

Journal Contribution - Journal Article

Using firm-level panel data for Estonia, we analyse the impact of international competition on firm dynamics, considering both firm closedown and product switches. We contribute to the literature in two important ways: first, this is the first paper to study the determinants of exit and product switching in an emerging market; and second, we consider explicitly the role of export opportunities. Our results indicate that globalization does not affect firm exit significantly but it is an important factor explaining why firms choose a different core product. Previous studies on industrial countries have shown that product switching has been a defensive strategy against low-cost imports. In contrast, our results suggest that Estonian firms change their core products as an offensive strategy to take advantage of the export opportunities created by a globalized economy.
Journal: Review of World Economics
ISSN: 1610-2878
Issue: 1
Volume: 148
Pages: 45 - 72
Publication year:2012
BOF-keylabel:yes
IOF-keylabel:yes
BOF-publication weight:1
CSS-citation score:1
Authors:International
Authors from:Higher Education
Accessibility:Open