Testing the Core‐competency Model of Multi‐product Exporters | Zendy

Eckel Carsten | Zendy; Iacovone Leonardo | Zendy; Javorcik Beata | Zendy; Neary J. Peter | Zendy

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Testing the Core‐competency Model of Multi‐product Exporters

Author(s) -

Eckel Carsten,

Iacovone Leonardo,

Javorcik Beata,

Neary J. Peter

Publication year - 2016

Publication title -

review of international economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.513

H-Index - 58

eISSN - 1467-9396

pISSN - 0965-7576

DOI - 10.1111/roie.12234

Subject(s) - core competency , dominance (genetics) , home market , core (optical fiber) , foreign direct investment , product market , market size , business , competence (human resources) , economics , market penetration , core product , industrial organization , product (mathematics) , international trade , international economics , monetary economics , microeconomics , marketing , market economy , macroeconomics , management , biochemistry , chemistry , materials science , geometry , mathematics , composite material , gene , incentive

We review the implications of the “core‐competence” model of multi‐product firms, including the “market‐size puzzle”: for most countries, the world market is much larger than the home market, while the costs of accessing foreign markets are relatively low; hence the model predicts that most domestic firms should export more of their core products than they sell domestically; yet, in practice, we do not observe this. Extending the model to allow for investment in export market penetration resolves the puzzle and Mexican data confirm its predictions: in particular, only the largest firms exhibit the dominance of exports over home sales.

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