Shandre Mugan Thangavelu: This paper studies the decisions of SMEs in undertaking the export activities as compared to larger firms for the Korean economy using Korean firm-level data. The paper develops a theoretical model to examine the determinants of exports of the firms in a heterogeneous framework. The theoretical model indicates that firms with higher fixed costs require higher technology above a threshold to enter the export market.
The paper also identifies the factors affecting export performance of firms through an empirical model. The paper adopts a two-stage framework to identify the factors affecting the export performance of firms. At the first stage, total factor productivity is derived using the quasi-Divisia index, which was decomposed into gross scale effect (efficiency change) and direct contribution of technical change (technological change). To derive the efficiency change, the paper estimates the transcendental logarithm cost function to derive cost elasticity with respect to output...