Internationalization and escapism: Government support as a pullback force for small and large enterprises

Abstract

We examine the effects of the interplay between home institutional constraints and government support policies, on the export intensity of small and large enterprises in emerging and developing economies. We consider three different kinds of government support policies: contracts, subsidies, and credits-and-loans (CSLs). We argue that CSLs can act as pullback forces to the escapist forces that push firms to internationalize. Drawing on Tobit regressions and a sample of 1544 firms in Eastern Europe, the Caucasus, and Central Asia, our findings show that CSLs act as pullback forces, with smaller firms being more susceptible.