Are exporting manufacturing SMEs more efficient than non-exporting ones? Evidence from Australia's business longitudinal database

This paper examines the efficiency performance of exporting versus non-exporting manufacturing small and medium enterprises (SMEs) using the Business Longitudinal Database compiled by the Australian Bureau of Statistics for the period 2005-2006. The results from an analysis of 543 manufacturing SMEs indicate that overall manufacturing SMEs improved their technical efficiency levels over time, particularly the exporting ones nearly reaching 80%. Among firms of the same size and the same narrowly defined industry, we found that the non-exporting SMEs tended to have lower efficiency levels compared to their exporting counterparts. One may attribute these efficiency differences to the inclusion of more exporting firms in the database and/or the better use of production technology by exporting SMEs. This paper calls for a focus on improving SME efficiency performance as an effective way to enhance their success in global export markets by pursuing a number of initiatives/programs already implemented in other OECD countries.