Total Factor Productivity Gap between Internationalized and Domestic Firms: Net Premium or Heterogeneity Effect?
Maria R. Ferrante, Maria Freo
Department of Statistics, University of Bologna, Italy

The empirical literature on international trade predicts the presence of a productivity premium for internationally involved firms with respect to the domestic ones. This finding is alternatively supported by comparing the productivity averages controlled for the relevant covariates or the unconditional productivity distributions. In the present paper we disentangle the (gross) productivity premium from the component due structural composition of the two groups of firms providing a measure of the (net) premium actually imputable to the internationalization status. By means of the quantile regression decomposition, the whole distribution of the net productivity premium is estimated.

The main results highlight that i) the net premium is substantially lower than the gross one and ii) while the difference in the gross premium is uniform along the whole distribution, the net premium is significant only for the less productive firms. These results are confirmed even if different internationalization modes are considered (i.e. export, agreements, commercial penetration) by assuming the domestic firms as baseline. An exception is given by the net premium referred to foreign direct investment/off-shoring that does not decrease for firms in the top of TFP distribution.

Future development will be focused on evaluating the pre-entry and post-entry (in the international markets) productivity differences, based on the availability of micro-panel data.