Old Firms and New Export Flows: Does Experience Increase Survival?

In this paper we present new empirical evidence on the relationship between exporting experience and the duration of export relationships at the firm-product-destination level. Our starting hypothesis that more experienced exporters would have longer lived product-market trade relationships is quite strongly rejected in baseline specifications. However,we find that when we introduce interaction effects between experience and product scope and also between experience and similarity to the firm's core export product, our results change considerably. These findings suggest that at some level of experience as an exporter there is a decline in the marginal return on the positive effects on survival of product diversification and proximity. We suggest that this is evidence that more experienced firms launch product-destination pairs further away from their core competence and/or into more risky markets which therefore increases the risk of failure of any individual product-destination pairing.