Corporate financial structure and firm's decision to export

Purpose The purpose of this paper is to analyse the decision to export in relation to financial issues, specifically the impact of corporate financial structure on a firm's export propensity (the likelihood of a firm becoming an exporter) by firm size. Design/methodology/approach A multivariate probit model is applied to a sample of 8,019 Spanish manufacturing firms drawn from the Iberian Balance Sheet Analysis System (SABI). The analysis is performed separately for small, medium and large firms. Findings The paper evidences, by firm size, a positive link between ownership concentration and export propensity, although for SMEs if shareholder concentration is very high it can be counterproductive. In addition, a high degree of liquidity influences the probability of entering export markets, while those firms that face high costs as result of their export activity may need to become indebted in order to secure the necessary financial resources. However, the strength of these latter effects differs in SMEs. Originality/value This paper broadens the understanding of the relationship between firms' export propensity and their financial health and ownership concentration, an internal factor not previously considered in the international business literature despite its relevance for firm's decision to export. The paper highlights that their influence is not uniform but affects firms of different sizes in different ways. This is of interest and value to scholars, investors and policy makers worldwide, since handling corporate financial structure and international strategies needs to be addressed in today's global business environment.