The effectiveness of incentives to firms' outward internationalization

Abstract

This article provides an empirical analysis on the effects of incentives to firms' outward internationalization on the firm's growth. Specifically, the analysis is conducted on 237 Italian firms that received an incentive in the period 1991 to 2007 versus a counterfactual sample of 307 firms that internationalized their activity in the same period without any incentive. The econometric results, stemming from a two-step treatment effect model, reveal that selection for getting the incentive tended not to be a random event and that incentives to firms' internationalization are highly effective especially when targeted towards smaller companies.

Notes

¹ http://www.simest.it

²STATA provides an estimate of rho (the correlation between the error terms of the two equations), sigma (s, the SE of the outcome regression if linear) and lambda (l = r × s). Namely, STATA automatically tests whether r = 0 (or equivalently, whether l = 0, as s > 0).