Internationalisation monitor 2012 - CBS

16 Statistics Netherlands
Internationalisation and enterprise dynamics– an in-depth analysis
An interesting issue, but thus far not yet explored is the relationship between internationalisation
and enterprise dynamics. Foreign controlled enterprises and enterprises
that engage in international trade play an integral part in the Dutch economy, generating
growth and employment. But at this point we know little of the dynamics behind these
enterprises, the determinants of these dynamics and their effects on the economy.
In chapter 6 we will explore the demography of enterprises in the Netherlands and the
differences in enterprise dynamics of internationally active enterprises versus domestically
oriented firms. Birth and death rates of various types of enterprises are distinguished by
size class and sector. Survival analysis is carried out for a panel of enterprises to determine
whether international orientation increases the life expectancy of an enterprise.
We found that, even though there are far more start-ups occur under Dutch control, they
often start out very small, while the relatively few foreign start-ups are on average larger
in size. Both Dutch controlled firms and foreign controlled firms increased in number
between 2007 and 2010; foreign controlled firms mainly due to mergers and acquisitions.
We also looked at survival rates among different types of enterprises. In general, almost
three out of five new firms survive at least five years. Survival rates vary by industry with
construction having the greatest and retail trade the smallest survival rates. Engaging in
international trade has a positive impact on firm survival, especially when an enterprise is
a two-way trader. Also, enterprises that start trading right after their birth, so-called born
globals, are less likely to exit than non-traders.
Whether the start-up or exit of a foreign controlled firm has different implications for
the Dutch economy, e.g. in terms of employment or turnover, compared to such an event
for a Dutch controlled enterprises is the topic of chapter 7. When we compare a foreign
controlled start-up to a similar Dutch start-up (in terms of size, economic activity, trade
status and turnover) it turns out that they have on average similar growth paths. As far
as exits are concerned, more employment was destroyed at foreign controlled enterprises
than at similar domestic controlled enterprises four years before exit. Whereas average
employment was comparable in the year before exit, four years before exit the average
foreign controlled exiter employed 28 persons and its Dutch controlled counterpart 13.
Chapter 8 extends the analysis of chapter 6 on international traders by digging deeper into
this specific population of enterprises, illustrating their economic development over time,
the manner in which they grow (extensive versus intensive margin), and when they do not
grow, factors that might have played a role in their survival.
Most traders start and stay small. Around two thirds of new traders start with one product
from/to one country. After five years, still around 70 percent of importers and exporters
(conditional on survival) trade with at most 5 countries and at most 5 products. Expanding
to new countries or new products is costly and brings along risk, which only the most
productive and profitable firms are able to do. As a result, most growth is achieved by