Sequentially exporting products across countries

Abstract

Exploiting disaggregated data on French exporters, we show that firms expand their productscope and geographical presence sequentially. This process of internationalization is unevenover time, exhibiting more volatility early than later in the life cycle of exporters. Specifically,young exporters are particularly likely to exit, and if they keep exporting, to expand at the intensive and sub-extensive margins, doing so by widening product scope within a destination beforeentering new destinations. We also find that firms´ core products are particularly resilient despitebeing used to “test the waters” when entering additional countries. Existing models of firm exportdynamics are not designed to explain these empirical regularities. We argue that they can be rationalized by a mechanism where new exporters are uncertain about the profitability of theirproducts in different markets, but learn from their initial export experiences and then adjusttheir sales, number of products and destination countries accordingly.