Adjusting the Internationalization Productivity Premium for Firms Heterogeneity by using the Quantile Regression Decomposition

The relationship between firm’s internationalization and productivity, widely analyzed in the literature, predicts the presence of a productivity premium for internationally involved firms with respect to the domestic ones. This finding is alternatively supported either by comparing the means of productivities over the two groups controlled for the relevant covariates or by the analysis of the stochastic dominance of the unconditional productivity distributions. In the present paper we unify the two approaches by estimating the entire distribution of the internationalization premium adjusted from the effects of different composition of groups. The statistical tool we adopt is based on the quantile regression decomposition approach. The main result we obtain shows that: i) by controlling for effects of firms heterogeneity the productivity premium is substantially reduced; ii) the adjusted productivity premium is significant only for less productive firms.