| dc.description.abstract | The Background for present Research:
The classical theory postulates maximization of profits as the basis for a firm's behavior.
Later developments have considered other basic objectives like 'maximization of sales (Baurnol)', 'pursuit of balanced rate of growth (Marris)', and 'maximization of managerial utility (Williamson)'.
However, one does not find any direct hypothesis regarding a firm's export behavior based on these 'theories of firm'. The framework of Michael Porter explains the entry of a firm into the export markets in terms of the competitive advantage of a firm arising out of firm specific advantages. A firm may achieve competitive advantage either by cost leadership or through product differentiation. Brander and
Spencer (1983) showed that government policies might also influence the creation of comparative advantage. The reforms initiated by the Government of India since 1991 have resulted in -a number of policy measures like the continual depreciation of the rupee, liberalization of imports, opening up of the current and capital accounts, rationalization of monetary policy etc. with the objective of improving the international competitiveness of Indian firms. Thus, a detailed empirical investigation of the determinants of export behavior for Indian firms is likely to be interesting and useful. Research Question: The objective of the present research is to investigate the firm level factors affecting exports and the variation in export performance across different industry groups in the Indian private corporate sector. This research also examines the impact of the reforms initiated in 1991 on these determinants.
Database and Methodology: We have used the firm-level database for the non-governmental, non-financial public limited companies collected by the RBI from the Department of Company Affairs, GOI, for the years 1980/81 to 1995/96. As our research involves an examination of the influence of different variables with and without lag on the export performance of firms, we have formed a sixteen-year panel data set from the above said RBI database. As India has competitive advantage in the chemical, engineering, textile and agrobased sectors, we have also formed sub-panels of these industries from our aggregate panel. We have first carried out a detailed examination of the data using
descriptive statistics to look for differences between the exporting and non-exporting firms. Next, we have used the random effects panel Tobit model to examine the impact of different explanatory variables on the export performance of firms (as measured through export intensity) at the aggregate level before and after the 1991 reforms. The influence of different industry categories has been examined in the model through the 'intercept dummies'.
Results and Conclusions: Our research establishes that there is a qualitative and quantitative effect of the 1991 reforms on the different determinants of exports that we have examined viz. firm size, import intensity, capital intensity, technology development related investment made by a firm, etc. We find that there is a difference in the export performance across different industry categories. Some explanatory variables are seen to have become very important in the post-reform period. For example, from an insignificant influence in the pre-reform period, the import intensity is seen to have a significant positive relationship with export intensity in the post-reform period. A significant finding of this research is the existence of a strong positive relationship between export performance and firm-level investment in technology in the post-reform period. This validates the argument of the neo-technology theories of international trade that investment in technology by individual firms would result in ownership advantages that can be exploited by firms in the international markets. | en |
