Advertisement

Job Creation of Exporters and Non-exporters: Evidence from Estonia

  • Tiia VissakEmail author
  • Jaan Masso
Chapter
Part of the Palgrave Studies of Internationalization in Emerging Markets book series (PSIEM)

Abstract

This chapter aims to find out how many and which types of jobs Estonian born globals, other exporters and non-exporters have created and how many and which types of jobs they have destroyed. Based on firm-level data from the Estonian Commercial Registry, Statistics Estonia and the Estonian Tax and Customs office, it shows that non-exporters had the highest job creation and hiring rates, while born globals’ rates were much lower. On the other hand, non-exporters also had the highest job destruction and separation rates. While in absolute terms, fast internationalizers (including born globals) were the most active in job creation and, in general, they were also larger than other firms, the latter managed to grow the most in percentage terms as they were very small in the beginning. We also found that born globals had the highest wage costs per employee and that fast internationalizers’ overall survival and export survival rates were higher than other firms’ rates. Consequently, although born globals’ net job reallocation and job flow rates were not always positive, their contribution in terms of creating more high-paid jobs should not be underestimated.

Keywords

Born globals Exporters Job creation Estonia 

Notes

Acknowledgements

This work was supported by the Institutional Research Funding IUT20-49 of the Estonian Ministry of Education and Research and by the Estonian Research Council’s grant PUT 1003. The compilation of the datasets used in the chapter was also supported by the Estonian Research Infrastructure’s Roadmap project “Infotechnological Mobility Observatory (IMO)”.

References

  1. Acs, Z. J., & Audretsch, D. B. (1989). Job creation and firm size in the U.S. and West Germany. International Small Business Journal, 7(4), 9–22.Google Scholar
  2. Andersson, S. (2018). Job creation in Swedish born globals. In I. Mandl & V. Patrini (Eds.), European born globals: Job creation in young international businesses (pp. 41–62). London: Routledge.Google Scholar
  3. Anyadike-Danes, M., Bjuggren, C.-M., Gottschalk, S., Hölzl, W., Johansson, D., Maliranta, M., et al. (2015). An international cohort comparison of size effects on job growth. Small Business Economics, 44(4), 821–844.CrossRefGoogle Scholar
  4. Armington, C., & Odle, M. (1982). Small business: How many jobs? The Brookings Review, 1(2), 14–17.CrossRefGoogle Scholar
  5. Åstebro, T., & Tåg, J. (2017). Gross, net, and new job creation by entrepreneurs. Journal of Business Venturing Insights, 8, 64–70.CrossRefGoogle Scholar
  6. Bassi, L. J. (1985). Evaluating alternative job creation strategies. Economic Inquiry, 23(4), 671–690.CrossRefGoogle Scholar
  7. Birch, D. L. (1979). The job generation process. Cambridge, MA: MIT Press.Google Scholar
  8. Birch, D. L. (1981). Who creates jobs? The Public Interest, 65(Fall), 3–14.Google Scholar
  9. Burgess, S., Lane, J., & Stevens, D. (2000). Job flows, worker flows, and churning. Journal of Labor Economics, 18(3), 473–502.CrossRefGoogle Scholar
  10. Caves, R. (1998). Industrial organization and new findings on the turnover and mobility of firms. Journal of Economic Literature, 36(4), 1947–1982.Google Scholar
  11. Cavusgil, S. T. (1980). On the internationalization process of firms. European Research, 8(6), 273–281.Google Scholar
  12. Cieślik, J. (2017). Entrepreneurship in emerging economies: Enhancing its contribution to socio-economic development. Cham: Springer.CrossRefGoogle Scholar
  13. Davis, S. J., Haltiwanger, J., & Schuh, S. D. (1996). Small business and job creation: Dissecting the myth and reassessing the facts. Small Business Economics, 8(4), 297–315.CrossRefGoogle Scholar
  14. Dencker, J. C., Gruber, M., & Shah, S. K. (2009). Individual and opportunity factors influencing job creation in new firms. Academy of Management Journal, 52(6), 1125–1147.CrossRefGoogle Scholar
  15. Dennis, W. J., Jr., & Phillips, B. D. (1994). Small business job creation: The findings and their critics. Business Economics, 29(3), 23–30.Google Scholar
  16. Dobbs, M., & Hamilton, R. T. (2007). Small business growth: Recent evidence and new directions. International Journal of Entrepreneurial Behavior & Research, 13(5), 296–322.CrossRefGoogle Scholar
  17. Eurofound. (2012). Born global: The potential of job creation in new international businesses. Luxembourg: Publications Office of the European Union.Google Scholar
  18. Eurofound. (2016). Job creation in SMEs: ERM annual report 2015. Luxembourg: Publications Office of the European Union.Google Scholar
  19. Haltiwanger, J. C., Jarmin, R. S., & Miranda, J. (2013). Who creates jobs? Small versus large versus young. Review of Economics and Statistics, 95(2), 347–361.CrossRefGoogle Scholar
  20. Hanby, V. J., & Jackson, M. P. (1979). An evaluation of job creation in Germany. International Journal of Social Economics, 6(2), 77–117.CrossRefGoogle Scholar
  21. Huber, P., Oberhofer, H., & Pfaffermayr, M. (2017). Who creates jobs? Econometric modeling and evidence for Austrian firm level data. European Economic Review, 91(January), 57–71.CrossRefGoogle Scholar
  22. Javalgi, R. G., White, D. S., & Lee, O. (2000). Firm characteristics influencing export propensity: An empirical investigation by industry type. Journal of Business Research, 47(3), 217–228.CrossRefGoogle Scholar
  23. Johanson, J., & Vahlne, J.-E. (1977). The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), 23–32.CrossRefGoogle Scholar
  24. Kandilov, I. T. (2009). Do exporters pay higher wages? Plant-level evidence from an export refund policy in Chile. World Bank Economic Review, 23(2), 269–294.CrossRefGoogle Scholar
  25. Knight, G. A., & Cavusgil, S. T. (1996). The born global firm: A challenge to traditional internationalization theory. In S. T. Cavusgil & T. Madsen (Eds.), Advances in international marketing 8 (pp. 11–26). Greenwich: JAI Press.Google Scholar
  26. Lecuna, A., Cohen, B., & Chavez, R. (2017). Characteristics of high-growth entrepreneurs in Latin America. International Entrepreneurship and Management Journal, 13(1), 141–159.CrossRefGoogle Scholar
  27. Ma, H., Qiao, X., & Xu, Y. (2015). Job creation and job destruction in China during 1998–2007. Journal of Comparative Economics, 43(4), 1085–1100.CrossRefGoogle Scholar
  28. Mandl, I. (2018a). Conclusions: Policy relevance of born globals for job creation in Europe. In I. Mandl & V. Patrini (Eds.), European born globals: Job creation in young international businesses (pp. 148–156). London: Routledge.Google Scholar
  29. Mandl, I. (2018b). SMEs and job creation in Europe. In I. Mandl & V. Patrini (Eds.), European born globals: Job creation in young international businesses (pp. 4–17). London: Routledge.Google Scholar
  30. Masso, J., Eamets, R., & Philips, K. (2006a). Job creation and job destruction in Estonia: Labour reallocation and structural changes. In H. Hannula, S. Radosevic, & N. von Tunzelmann (Eds.), Estonia, the new EU economy: Building a Baltic miracle? (pp. 105–142). Burlington: Ashgate.Google Scholar
  31. Masso, J., Eamets, R., & Philips, K. (2006b). Job flows and worker flows in the Baltic States: Labour reallocation and structural changes. In T. Paas & R. Eamets (Eds.), Labor market flexibility, flexicurity and employment: Lessons of the Baltic States (pp. 61–99). Hauppauge, NY: Nova Science.Google Scholar
  32. Masso, J., Rõigas, K., & Vahter, P. (2015). Foreign market experience, learning by hiring and firm export performance. Review of World Economics, 151(4), 659–686.CrossRefGoogle Scholar
  33. Masso, J., & Vahter, P. (2014). The role of product-level dynamics in export growth and productivity: Evidence from Estonia. Emerging Markets Finance and Trade, 50(4), 42–60.CrossRefGoogle Scholar
  34. Masso, J., & Vahter, P. (2015). Exporting and productivity: The effects of multi-product and multi-market export entry. Scottish Journal of Political Economy, 62(4), 325–350.CrossRefGoogle Scholar
  35. Matthee, M., Rankin, N., Webb, T., & Bezuidenhout, C. (2018). Understanding manufactured exporters at the firm-level: New insights from using SARS administrative data. South African Journal of Economics, 86(1), 96–119.CrossRefGoogle Scholar
  36. Meriküll, J. (2016). Labor market transitions during the great recession in Estonia. In M. Kahanec & K. F. Zimmermann (Eds.), Labor migration, EU enlargement, and the great recession (pp. 347–365). Berlin: Springer.Google Scholar
  37. Mets, T. (2016). Is Estonia becoming better home for “born globals”? In D. Smallbone, M. Virtanen, & A. Sauka (Eds.), Entrepreneurship, innovation and regional development (pp. 101–124). Cheltenham: Edward Elgar.CrossRefGoogle Scholar
  38. Moser, C., Urban, D., & di Mauro, B. W. (2010). International competitiveness, job creation and job destruction—An establishment-level study of German job flows. Journal of International Economics, 80(2), 302–317.CrossRefGoogle Scholar
  39. Oberholzner, T., & Dorr, A. (2018). Employment and job creation in born global enterprises in Austria. In I. Mandl & V. Patrini (Eds.), European born globals: Job creation in young international businesses (pp. 63–85). London: Routledge.Google Scholar
  40. OECD. (2016). Job creation and local economic development 2016. Paris: OECD Publishing.CrossRefGoogle Scholar
  41. Oviatt, B. M., & McDougall, P. P. (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1), 45–64.CrossRefGoogle Scholar
  42. Phillips, B. D., & Kirchhoff, B. A. (1989). Formation, growth and survival: Small firm dynamics in the U.S. economy. Small Business Economics, 1(1), 65–74.Google Scholar
  43. Picot, G., & Dupuy, R. (1998). Job creation by company size class: The magnitude, concentration and persistence of job gains and losses in Canada. Small Business Economics, 10(2), 117–139.CrossRefGoogle Scholar
  44. Ruzzier, M., & Ruzzier, M. K. (2015). On the relationship between firm size, resources, age at entry and internationalization: The case of Slovenian SMEs. Journal of Business Economics and Management, 16(1), 52–73.CrossRefGoogle Scholar
  45. Sleuwaegen, L., & Onkelinx, J. (2014). International commitment, post-entry growth and survival of international new ventures. Journal of Business Venturing, 29(1), 106–120.CrossRefGoogle Scholar
  46. Stangler, D., & Litan, R. E. (2009). Where will the jobs come from? Kansas City: Kauffmann Foundation.CrossRefGoogle Scholar
  47. Tacero, M. D., Heredero de Pablos, M. I., & Benito, S. M. R. (2017). Exports and employment in the Spanish economy: A repetitive pattern. Investigacion Economica, 76(301), 137–169.CrossRefGoogle Scholar
  48. Tyrowicz, J., van der Velde, L., & Svejnar, J. (2017). Effects of labor reallocation on productivity and inequality—Insights from studies on transition. Journal of Economic Surveys, 31(3), 712–732.CrossRefGoogle Scholar
  49. Vissak, T. (2007). The emergence and success factors of fast internationalizers: Four cases from Estonia. Journal of East-West Business, 13(1), 11–34.CrossRefGoogle Scholar
  50. Vissak, T. (2013). Impact of the global crisis on the internationalization of Estonian firms: A case study. In M. A. Marinov & S. T. Marinova (Eds.), Emerging economies and firms in the global crisis (pp. 292–313). Houndmills: Palgrave Macmillan.CrossRefGoogle Scholar
  51. Vissak, T., Lukason, O., & Segovia-Vargas, M.-J. (2018). Interconnecting exporter types with export growth and decline patterns: Evidence from matched mature Estonian and Spanish firms. Review of International Business and Strategy, 28(1), 61–76.CrossRefGoogle Scholar
  52. Vissak, T., & Masso, J. (2015). Export patterns: Typology development and application to Estonian data. International Business Review, 24(4), 652–664.CrossRefGoogle Scholar
  53. Vissak, T., & Masso, J. (2018). Estonian born globals’ job creation. In I. Mandl & V. Patrini (Eds.), European born globals: Job creation in young international businesses (pp. 86–104). London: Routledge.Google Scholar
  54. Wagner, J. (1995). Firm size and job creation in Germany. Small Business Economics, 7(6), 469–474.CrossRefGoogle Scholar
  55. Yazdanfar, D., & Öhman, P. (2018). Growth and job creation at the firm level: Swedish SME data. Management Research Review, 41(3), 345–358.CrossRefGoogle Scholar
  56. Zahra, S. A. (2005). A theory of international new ventures: A decade of research. Journal of International Business Studies, 36(1), 20–28.CrossRefGoogle Scholar
  57. Zahra, S. A., Ireland, R. D., & Hitt, M. A. (2000). International expansion by new venture firms: International diversity, mode of market entry, technological learning, and performance. Academy of Management Journal, 43(5), 925–950.Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  1. 1.School of Economics and Business AdministrationUniversity of TartuTartuEstonia

Personalised recommendations