It Is Not All in the Debt Level: Debt Maturity Structure and Complete Export Withdrawal in International New Ventures

Abstract

Past research shows that firms with constrained access to debt are more likely to withdraw from exporting. We argue that firms’ debt maturity structure – that is their use of short-term versus long-term debt – also matters, because different debt maturities entail different risks (i.e. liquidity risk versus underinvestment risk). Using data from Belgian international new ventures (INVs), and controlling for self-selection into exporting, we find that INVs relying primarily on either short-term debt or long-term debt are more likely to subsequently withdraw from exporting than INVs with a balanced debt maturity structure (i.e. comprising an optimal mixture of short- and long-term debts). This U-shaped relationship is weaker for INVs with more financial slack and stronger for those with higher growth opportunities. Overall, while past research emphasizes the impact of financial resource levels on export withdrawal, our study underscores the role of the structure of these resources. Our study contributes to the international entrepreneurship literature and resource mobilization literature in management.