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TopBackground
The term learning-by-exporting (LBE) appeared in literature nearly three decades ago as a consequence of observing the beneficial influence of exports on the growth of newly-industrialized Asian economies. The concept of LBE assumes that engaging in exporting stimulates innovativeness, promotes advantageous organizational changes and improves the communicative competencies of enterprises, all of which translates into the growth of their productivity.
However, it should be noted that not all “export effects” may be attributed to LBE. This is because exporting may affect the improvement of productivity also through other channels – exploiting the economies of scale or the reduction of waste in export production. One may speak of the growth of productivity as a result of learning-by-exporting if, for example, a foreign client imposes higher quality standards on an exporter than domestic clients do and indicates how can these standards be achieved, or if pressure from foreign competition forces advantageous changes in export businesses. It enables a further generation of external benefits on the home market. This is the direction of influence of investments focusing on the growth of exports, personnel training or product customization to the requirements of foreign clients. Imitating such activities by home-market-oriented companies, without the necessity of incurring high initial costs, is called the demonstration effect. Export expansion may produce other types of benefits, such as the promotion of domestic entities on export markets, thus opening the way abroad to other exporters by lowering the level of “sunk costs” that accompany the initiation of exporting.
Key Terms in this Chapter
Learning-by-Doing: A systematic development of experience among production employees and managerial staff with regard to solving technical or organizational problems.
Sunk Costs: Costs associated with entering foreign markets, related to transport and delivery, product adaptation, creating a network of customers and other aspects of marketing.
Learning-by-Exporting: An increase in productivity of an enterprise induced by the onset of exporting; a post-foreign-market-entry effect that is a consequence of an exporter facing new challenges arising from contacts with clients or from competitive pressure. Learning-by-exporting results in quality improvements, technology upgrading, designing new products, imitating superior marketing techniques or management solutions.
Self-Selection Mechanism: A mechanism according to which only enterprises with sufficiently high productivity become predestined and liable to engage in export; an ex-ante higher level of productivity is prerequisite for covering sunk costs and entering a foreign market.
Hysteresis Mechanism: Dependence of a system on its condition in earlier periods; a concept explaining a persistence of learning by exporting effects even if exporting activity is interrupted.
Learning-to-Innovate: All activities undertaken by an enterprise to improve its innovativeness, including introducing own R&D as well intensifying interactions with technologically advanced business partners.
Exporting Externalities: Benefits from exporting visible on home markets, including knowledge spillovers from exporters to non-exporters as well as promotion of domestic enterprises on foreign markets, thus opening the way abroad to other exporters by lowering a level of sunk costs.