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1350.0 - Australian Economic Indicators, Jan 2010  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 23/12/2009   
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BUSINESS CHARACTERISTICS OF SMALL AND MEDIUM-SIZED AUSTRALIAN EXPORTERS


BUSINESS CHARACTERISTICS OF SMALL TO MEDIUM SIZED AUSTRALIAN EXPORTERS

Introduction

Various studies have found that firms that export have different characteristics to non-exporters. However, most of these studies are from America and Europe and they tend to concentrate on large businesses. This article uses data from the Australian Bureau of Statistics (ABS) Business Longitudinal Database (BLD) to investigate if there are fundamental differences between Australian small and medium-sized firms that export and those that do not.


Summary Statistics from the BLD Study

The study used a sample of 5,747 employing businesses from the 2006-07 BLD to compare exporters and non-exporters. The study looked at the full sample which included businesses classified to 14 different industries and those businesses in the Manufacturing division.

Table 1 shows the number of businesses in the sample according to industry and whether or not they are exporters. At the aggregate level 11.3% of businesses in the sample are exporters, with some industries having a much higher share of exporters including Information Media and Telecommunications (27.5%), Wholesale Trade (26.5%), and Manufacturing (24.4%).

Table 1 - Number and Proportion of 2006 - 07 BLD Units by Export Status

Non-Exporters
Exporters
Total
No.
%
No.
%
No.

Industry Division (ANZSIC 2006)
Agriculture, Forestry and Fisheries
1 179
95.4
57
4.6
1 236
Mining
184
88.9
23
11.1
207
Manufacturing
659
75.6
213
24.4
872
Construction
331
96.2
13
3.8
344
Wholesale Trade
405
73.5
146
26.5
551
Retail Trade
265
89.5
31
10.5
296
Accommodation and Food Services
375
98.4
6
1.6
381
Transport, Postal and Warehousing
377
97.4
10
2.6
387
Information Media and Telecommunications
145
72.5
55
27.5
200
Rental, Hiring and Real Estate Services
174
97.2
5
2.8
179
Professional, Scientific and Technical Services
252
85.7
42
14.3
294
Administrative and Support Services
198
91.7
18
8.3
216
Arts and Recreation Services
221
93.3
16
6.8
237
Other Services
331
95.4
16
4.6
347
Total
5 096
88.7
651
11.3
5 747




Comparing Exporters with Non-Exporters

For all businesses in the sample an average, or mean, was taken for sales, sales per employee, average wage, value-added, assets, age or length of current ownership and number of employees. Table 2 shows the statistics for all industries, and separately for Manufacturing businesses.

Table 2 - Statistics Comparing Characteristics of Exporters and Non-Exporters

Non-Exporters
Exporters
Variable
N
Mean
N
Mean

14 Industries
Sales
5 096
2 834 859
651
10 097 416
Sales per employee
5 096
224 313
651
360 983
Average Wage
4 498
32 906
623
47 173
Value-added
5 066
867 626
651
2 442 964
Assets
3 160
2 312 655
422
7 423 663
Age (Length of current ownership)
5 096
14.0
651
15.3
Employees
5 096
13.1
651
28.4
Manufacturing
Sales
659
3 053 005
213
10 216 145
Sales per employee
659
182 459
213
306 317
Average Wage
582
27 014
206
42 014
Value-added
654
838 893
213
2 501 281
Assets
431
1 963 199
140
6 842 356
Age (Length of current ownership)
659
13.1
213
17.2
Employees
659
15.5
213
34.0



These statistics show that exporters have higher total sales, sales per employee, and value-added; pay higher average wages; and, possess more assets than non-exporters. They have also been in operation under current ownership longer and employ more staff than non-exporters.

Businesses were also classified according to whether they had any degree of foreign ownership, a web presence, increased targeting of export markets and whether they were involved in innovation activity such as goods and services innovation, operational process innovation or organisational/management innovation. Table 3 shows the results.

Table 3 - Statistics of How Exporters and Non-Exporters Differ

All BLD Industries
Manufacturing
Non-Exporters
Exporters
Non-Exporters
Exporters
(%)
(%)
(%)
(%)

Any Degree of Foreign Ownership
2.8
18.0
2.7
17.8
Has a Web Presence
33.0
76.8
37.2
81.7
Increased Targeting of Export Markets
2.1
23.2
3.2
29.1
Goods and Service Innovation
17.0
32.1
25.2
36.2
Process Innovation
19.4
33.8
28.2
41.8
Management Innovation
17.7
27.2
17.5
27.7



In both samples it is clear that exporters have a higher propensity to have some degree of foreign ownership, a web presence, target export markets and engage in innovative activity.


Exporters and Non-Exporters Across All Industries

A statistical analysis of the total BLD sample shows that sales per employee (which is a labour productivity proxy), business age, foreign ownership, web presence (which is a proxy for ICT use) and increased targeting of export markets (which is a proxy for management commitment to export) are all positively and significantly associated with exporting.

When businesses were looked at according to size (1-4, 5-19, 20-99 and 100-200 employees) it was found that businesses with 1-4 employees were less likely to export than larger businesses, but as business size increased there was not a proportional increase in the probability of exporting.


Exporters and Non-Exporters for the Manufacturing Division

When the sample size is reduced from 5,747 businesses across 14 industry divisions to 872 businesses in the Manufacturing Division, the results are very similar. The labour productivity proxy, foreign ownership, and the use of ICT and management commitment to export proxies are all positively and significantly associated with exporting. However, the use of different innovations are not significant.

There were some differences when comparing manufacturing businesses to all industries, especially when looking at business age and business size. Among manufacturing businesses, longevity or age is neutral in its effect on exporting, while the data suggests the effect of size on export status diminishes once a manufacturing business employs more than 100 staff.


Conclusions

Australian small and medium-sized businesses in the BLD that were exporters in 2006-07 have higher total sales and sales per employee; generate more value-added; pay higher average wages; and, possess more assets than non-exporters. In addition, they have been in operation under current ownership longer and employ more staff than non-exporters.

The results suggest that productivity, foreign ownership, commitment to export, use of information and communication technology, and business size are positively and significantly associated with export status. However, business size (as measured by number of employees) appears to have a non-linear relationship with export status. In particular amongst manufacturing businesses the marginal effect of size seems to diminish after a business employs more than 100 staff.


Further Information

This article is based on a paper presented by David Hansell and Tala Talgaswatta at the 2009 Australian Conference of Economists held at Adelaide University. For further information on the analysis in this article and the variables used please contact David Hansell on Canberra (02) 6252 7456 or email <david.hansell@abs.gov.au>.


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