Exporting and the Smaller Firm

Abstract

PROFESSORJOHN SAMUELS IS HEAD OF Birmingham Business School, Dr. Sheila Greenfield is a Research Fellow in the Department of Accounting and Finance, and Herrick Mpuku is with the Department of Economics, all at Birmingham University, England. The objective of this paper is to report on research into the pricing behaviour in the export market and the attitude towards risk of a sample of smaller companies located in the West Midlands of England. The study was undertaken in 1990 at a time of high interest rates and volatile exchange rates. The particular questions considered included the terms of trade, the currency of invoicing, the extent to which hedging takes place, the adjustment of export prices to changing exchange rates, and the use of the government's Export Credits Guarantee Department, which insures exporters against non-payment and other risks. The responses were analysed by the size of firms, the years of experience in exporting, and the percentage of turnover that is exported. The firms in the sample varied from those employing less than 10 people to those employing more than 200. Not surprisingly because the survey was conducted among Birmingham and West Midlands companies, the vast majority are in the metal goods, engineering and manufacturing industries. More than 40 per cent of the firms had been exporting for more than 50 years.