Foreign Market Entry and Exit: Performance Dynamics of French Firms

'Being international' has nearly become an undisputed aim for firms in a globalized world. Often, however, we do not know much about the actual performance consequences of firms' foreign market entries as well as exits. We apply a propensity score matching technique in combination with a difference-in-difference estimator to analyse the performance dynamics of French firms that have entered and left international markets during the period 2000-2007. Market entry has on average a positive home market effect in terms of productivity and turnover, whereas employment is hardly affected. Former exporters becoming engaged in FDI experience a strong export growth, indicating that FDI is rather complementing than substituting export activities. Overall, market exit has only limited effects on domestic performance, but industry differences reveal that low-tech firms are confronted with a remarkable decrease in labour productivity.