{"id":32189,"date":"2024-05-22T15:27:35","date_gmt":"2024-05-22T19:27:35","guid":{"rendered":"https:\/\/poole.ncsu.edu\/thought-leadership\/?p=32189"},"modified":"2024-05-22T15:27:39","modified_gmt":"2024-05-22T19:27:39","slug":"how-exports-and-imports-define-business-models","status":"publish","type":"post","link":"https:\/\/poole.ncsu.edu\/thought-leadership\/article\/how-exports-and-imports-define-business-models\/","title":{"rendered":"How Exports and Imports Define Business Models"},"content":{"rendered":"\n\n\n\n\n

The <\/em>Devils and Wolves<\/em><\/a> seminar series brings high-quality research in international economics to the Triangle. <\/em><\/p>\n\n\n\n

In this column, Poole College\u2019s <\/em>Andrew Greenland<\/em><\/a>, assistant professor of economics, and <\/em>Luca David Opromolla<\/em><\/a>, Owens Distinguished Professor of International Economics, share research presented at the March 29th seminar.<\/em><\/p>\n\n\n\n

In our globalized economy, international trade is essential to any country\u2019s economic health. New research shows that it\u2019s also an important indicator for individual firms.<\/p>\n\n\n\n

A recent study by Giordano Mion<\/a>, professor of economics at ESSEC Business School, and Joana Silva<\/a>, associate professor of economics at Cat\u00f3lica Lisbon School of Business & Economics, explains how exporting and importing can fundamentally alter a firm\u2019s business model and its competitiveness.<\/p>\n\n\n\n

Competing in the international market is challenging. Successfully entering a foreign market demands quality products, technological efficiency, and a skilled, well-prepared workforce. The ability to import intermediate inputs that win the confidence of consumers overseas is another crucial factor for firms that explore new export venues.<\/p>\n\n\n\n

Mion and Silva, relying on an extensive dataset covering the production, pricing and international trade activities of Brazilian manufacturing firms between 2005 and 2014, show that exporting and importing deeply impact the way firms function. <\/p>\n\n\n\n

The nature of that impact varies. Firms that increase exports, the study finds, tend to rely on a more skilled workforce and charge higher prices, but they use less efficient technologies. A positive imports shock, on the other hand, pushes firms toward lower prices and higher technological efficiency.<\/p>\n\n\n\n

Here\u2019s one way to interpret Mion and Silva\u2019s results: Think of Toyota and Ferrari. Both produce cars, but they compete in very different market segments. Toyota is presumably more efficient, producing more cars per input used. But Ferrari\u2019s cars are in a superior quality segment. <\/p>\n\n\n\n

Mion and Silva suggest that exporting leads firms to look more like Ferrari, investing in product quality. Importing leads them down Toyota\u2019s path of higher efficiency.<\/p>\n\n\n\n

That\u2019s in the aggregate. Any single firm\u2019s decision on how to tilt the trade-off between quality and technology, of course, is based on its own evaluation of what\u2019s best for business\u2013and on the presence or absence of any policy-driven obstacles to trade.<\/p>\n","protected":false,"raw":"\n\n\n\n\n

The <\/em>Devils and Wolves<\/em><\/a> seminar series brings high-quality research in international economics to the Triangle. <\/em><\/p>\n\n\n\n

In this column, Poole College\u2019s <\/em>Andrew Greenland<\/em><\/a>, assistant professor of economics, and <\/em>Luca David Opromolla<\/em><\/a>, Owens Distinguished Professor of International Economics, share research presented at the March 29th seminar.<\/em><\/p>\n\n\n\n

In our globalized economy, international trade is essential to any country\u2019s economic health. New research shows that it\u2019s also an important indicator for individual firms.<\/p>\n\n\n\n

A recent study by Giordano Mion<\/a>, professor of economics at ESSEC Business School, and Joana Silva<\/a>, associate professor of economics at Cat\u00f3lica Lisbon School of Business & Economics, explains how exporting and importing can fundamentally alter a firm\u2019s business model and its competitiveness.<\/p>\n\n\n\n

Competing in the international market is challenging. Successfully entering a foreign market demands quality products, technological efficiency, and a skilled, well-prepared workforce. The ability to import intermediate inputs that win the confidence of consumers overseas is another crucial factor for firms that explore new export venues.<\/p>\n\n\n\n

Mion and Silva, relying on an extensive dataset covering the production, pricing and international trade activities of Brazilian manufacturing firms between 2005 and 2014, show that exporting and importing deeply impact the way firms function. <\/p>\n\n\n\n

The nature of that impact varies. Firms that increase exports, the study finds, tend to rely on a more skilled workforce and charge higher prices, but they use less efficient technologies. A positive imports shock, on the other hand, pushes firms toward lower prices and higher technological efficiency.<\/p>\n\n\n\n

Here\u2019s one way to interpret Mion and Silva\u2019s results: Think of Toyota and Ferrari. Both produce cars, but they compete in very different market segments. Toyota is presumably more efficient, producing more cars per input used. But Ferrari\u2019s cars are in a superior quality segment. <\/p>\n\n\n\n

Mion and Silva suggest that exporting leads firms to look more like Ferrari, investing in product quality. Importing leads them down Toyota\u2019s path of higher efficiency.<\/p>\n\n\n\n

That\u2019s in the aggregate. Any single firm\u2019s decision on how to tilt the trade-off between quality and technology, of course, is based on its own evaluation of what\u2019s best for business\u2013and on the presence or absence of any policy-driven obstacles to trade.<\/p>\n"},"excerpt":{"rendered":"

A firm’s approach to international trade is a key indicator of its inner workings. <\/p>\n","protected":false},"author":732,"featured_media":32279,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"source":"","ncst_custom_author":"","ncst_show_custom_author":false,"ncst_dynamicHeaderBlockName":"ncst\/default-post-header","ncst_dynamicHeaderData":"{\"caption\":\"A container ship loads up before departing from an international port.\",\"showAuthor\":true,\"showDate\":true,\"showFeaturedVideo\":false,\"subtitle\":\"To know how a firm works, look at its approach to international trade. A recent Poole College seminar explored why.\"}","ncst_content_audit_freq":"","ncst_content_audit_date":"","ncst_content_audit_display":false,"ncst_backToTopFlag":"","footnotes":""},"categories":[122],"tags":[371,395,373,394,372,393,337],"_ncst_magazine_issue":[],"series":[],"class_list":["post-32189","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","tag-devils-and-wolves","tag-export","tag-greenland","tag-import","tag-international-economics","tag-international-trade","tag-opromolla"],"displayCategory":null,"acf":{"ncst_posts_meta_modified_date":null},"_links":{"self":[{"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/posts\/32189","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/users\/732"}],"replies":[{"embeddable":true,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/comments?post=32189"}],"version-history":[{"count":5,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/posts\/32189\/revisions"}],"predecessor-version":[{"id":32318,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/posts\/32189\/revisions\/32318"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/media\/32279"}],"wp:attachment":[{"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/media?parent=32189"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/categories?post=32189"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/tags?post=32189"},{"taxonomy":"_ncst_magazine_issue","embeddable":true,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/_ncst_magazine_issue?post=32189"},{"taxonomy":"series","embeddable":true,"href":"https:\/\/poole.ncsu.edu\/thought-leadership\/wp-json\/wp\/v2\/series?post=32189"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}