An examination of the relationship between firm size and export activity in the New Zealand lumber industry : a thesis presented in partial fulfilment of the requirements for the degree of Master of Philosophy in Development Studies, Massey University

Abstract

This thesis explores the relationship between export activity and firm size, with specific reference to New Zealands lumber industry. The main purpose of this investigation is to identify firm characteristics which link firm size to export behavior. This task basically involves exploring the literature to identify possible linking variables and.conducting tests to determine whether or not these characteristics actually link export activity and firm size in New Zealand's lumber industry. · Two major areas of research were drawn upon to produce the hypotheses of this study: determinants of export activity and firm size-related variables in the lumber industry. The former body of literature is well-defined and very extensive. A great deal of empirical research has been done on firm-level export behavior (though unfortunately very little theoretical study has been done to link export behavior back to microeconomics. The second area of research is not very well­ defined. Inferences on the relationship between various characteristics and firm size are drawn from the literature on lumber production in New Zealand. These inferences are supplemented by scattered pieces of research on the linkage between firm size and firm characteristics, as well as by sensible guesses as to how certain characteristics are associated with firm size. Using these two areas of research, hypotheses were drawn as to how firm size and export activity are linked.

Based upon these two areas of study then, nine characteristics were identified as possible links between firm size and export activity: proximity to a city, product quality, production cost, legal structure, foreign ownership, managerial experience and education, marketing skill, export­ related information, and managerial attitudes and ambition. It was decided to test these hypotheses by conducting a survey of New Zealand's lumber industry. This particular industry was selected because it was felt that a greater understanding of the export dynamics of this sector would assist policymakers in stimulating New Zealand's economy. In all, 26 lumber mills (out of 40 that were contacted) agreed to participate in the survey. On the whole, it was found that some characteristics do link firm size to export activity. Specifically, legal structure, managerial experience and education, and managerial attitudes and ambition were found to be significantly related to both export activity and firm size. These results suggest that firm size can be indirectly linked to export activity. However, researchers should be aware that the nature of this link could possibly vary with industry, place and time. Hence, using firm size as a predictor of export activity should be avoided until more research is conducted.