One of the factors that are thought to be important to make some firms more productive than others is exporting. Bartelsman and Doms (2000) survey of the literature on productivity that uses longitudinal micro-level data sets points out to the link between productivity and exporting as one of the factors this literature has focused on (the rest of factors are regulation, management/ownership, technology and human capital). Studies by Aw and Hwang (1995) on Taiwan; Bernard and Jensen (1995) (1999) on the US; Bernard and Wanger (1997) on Germany; Clerides, Lach and Tybout (1998) on Colombia, Mexico and Marocco; Aw, Chung and Roberts (2000) on Taiwan and South Korea; Girma, Greenaway and Kneller (2002) on the UK, provide evidence on the fact that export oriented firms are more productive than non-exporters.

Sunk costs are the main argument outlined to explain why exporters are more efficient than non-exporters, in particular the existence of higher sunk entry costs for exporters with respect to non-exporters. The argument comes from models of industry dynamics Jovanovic (1982) and Hopenhayn (1992)- and applies also to entry and exit to export markets as suggested by Aw, Chen and Roberts (1997). According to this argument, differences in sunk entry costs can explain productivity differences between exporters and domestic-oriented firms. Building on these ideas Roberts and Tybout (1997), Clerides, Lach and Tybout (1998) and Bernard and Jensen (2001) have developed models of the decision to export. The result that firm’s previous export status is a determinant of the decision to export is interpreted, in term of these models, as a favorable evidence to the existence of sunk entry cost in the export market.