Japanese Small and Medium-Sized Enterprises' Export Decisions: The Role of Overseas Market Information
This paper examines how the Japanese firms' export decision is affected by the availability of information on export markets, focusing on whether the availability of such information has a different impact on the export decision between large firms and small and medium-sized enterprises (SMEs). Unlike existing studies which solely focus on information sharing among firms, we are interested in the role of firms' lender banks as an additional source of information. Specifically, using a unique dataset containing information not only on firms' export activities but also on their lender banks' exposure to other exporting firms and lender banks' own overseas activities, we find that information spillovers through lender banks positively affect SMEs' decision to start exporting and the range of destinations to which they export. Such information spillovers also reduce the likelihood that exporter firms exit from export markets. The export-to-sales ratio of exporter firms, however, is not affected by such information spillovers. These results imply that information on foreign markets provided by lender banks substantially reduces the fixed entry costs associated with starting exporting and entering new export markets as well as firms' costs associated with continuing to export. Our results highlight that channels of information spillovers other than those examined in the literature so far may be of considerable importance, especially for SMEs.