Year: 2012
Type: report
Abstract: We demonstrate that simply by using the ethnic makeup surrounding a firm's location, we can predict, on average, which trade links are valuable for firms.Using customs and port authority data on the international shipments of all U.S. publicly-traded firms, we show that firms are significantly more likely to trade with countries that have a strong resident population near their firm headquarters.We use the formation of World War II Japanese Internment Camps to isolate exogenous shocks to local ethnic populations, and identify a causal link between local networks and firm trade links.Firms that exploit their local networks (strategic traders) see significant increases in future sales growth and profitability, and outperform other importers and exporters by 5%-7% per year in risk-adjusted stock returns.In sum, our results document a surprisingly large impact of immigrants' economic role as conduits of information for firms in their new countries.
DOI: 10.3386/w18312
Authors: Lauren Cohen, Umit Gurun, Christopher Malloy
Institutions: National Bureau of Economic Research, Harvard University, University of Arizona, University of Miami, The University of Texas at Dallas, The University of Melbourne, University of Alabama, University of Mannheim, Washington University in St. Louis, University of South Florida, Özyeğin University, University of Virginia, Michigan State University, University of Amsterdam
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1532080086