Abstract

To explore the effect of small and medium sized enterprises (SMEs) export exit on subsequent firm performance, we complement the “sunk cost” perspective on export entry and exit from international economics with the commitment perspective from strategy research. Export allows SMEs to enter foreign markets with limited resource commitments and sunk costs, making the decision reversible. Although foreign market entry is often followed by a return to the domestic market, the phenomenon of international market exit has received scant attention in academic research. Some firms may exit foreign markets proactively, to focus on the domestic market, in other cases the exit is followed by firm death. Even surviving firms are likely to suffer from negative performance implications.

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