Management, productivity and firm heterogeneity in international trade

Abstract

Purpose: This paper aims to analyse the relevance of management and productivity in the behaviour of firms in international trade. Design/methodology/approach: Using a survey of Spanish manufacturing firms, the authors use a management quality index to serve as a proxy for the good management practice of the firm. Findings: The results demonstrate that exporter and multinationals firms are more productive and better managed than domestic firms. Furthermore, in the periods in which switcher firms decide to export or to invest abroad, they are better managed but are not more productive than in the rest of the periods. Finally, results indicate that regardless of its positive relationship with productivity, management also has a direct impact on the firm’s probability of exporting and involving in foreign direct investment. Originality/value: This paper aims to reconcile the recent international trade literature, which focusses on the role of productivity heterogeneity in international trade, with the international business literature, concentrated on depicting the key management practices that impact internationalization.