The Puzzle of the Excessive Export Market Exit of Firms with Specific Import Market Experience
Excessive export market exit remains an unsolved puzzle.It is now widely acknowledged that international experience contributes to the survival of exports and mitigates export market exit.This study comprehensively explores the effect that a firm's market-specific import experience has on export market exit.Using Chinese customs data from between 2000 and 2016,on the one hand,the paper empirically finds that import experience increases the likelihood of an exporter's exit from the export market,which at first glance appears to be counterintuitive;on the other hand,it verifies the following three contrasting but not mutually exclusive mechanisms.(ⅰ)The market learning mechanism creates a diminishing impact;(ⅱ)the sunk cost reduction mechanism creates an increasing impact through both the reverse hysteresis and trial-and-error effects;and(ⅲ)the import-export market overlapping mechanism-a newly identified mechanism in the paper-has a decreasing impact through the risk hedging effect,and an increasing impact through the risk amplifying effect,with the former dominating.Further,it uncovers some heterogeneous and synergic effects of the import experience.The study findings revitalise the understanding of the import experience and export market exit,and provide new insights to exporters on how to make the most of import experiences to promote exports and diversify risk.