Exports: A Necessary Ingredient in the Growth of Small Business Firms

By Edmunds, Stahrl E.; Khoury, Sarkis J. | Journal of Small Business Management, October 1986 | Go to article overview
Save to active project

Exports: A Necessary Ingredient in the Growth of Small Business Firms

Edmunds, Stahrl E., Khoury, Sarkis J., Journal of Small Business Management


U.S. businesses, and small firms in particular, play a much smaller role in international trade than the size and competitive stature of the nation warrants. The United States have five percent of the world's population, produces 24 percent of the world's gross product, and does 12 percent of world exporting. But of the 12 percent, one-fourth is in agricultural and extractive products, leaving only eight percent of GNP as merchandise exports. By contrast, the export ratio to GNP of Canada is 24 percent, of Japan, 13 percent; and of the European Community (OECD), 26 percent.

Until the early 1970s, the United States usually had a net export balance in its merchandise trade. Then, the shift in competitive advantage from the U.S. to other countries brought higher U.S. imports in oil, automobiles, and consumer durables. These rising imports, along with higher interest rates in the United States, resulted in a balance of trade deficit in the range of -$24 to -$32 billion from 1979 to 1982. The U.S. trade deficit for 1984 was $123 billion.

Attempts to fight inflation, along with a huge ($200 billion) federal deficit, have caused the U.S. balance of trade to deteriorate further. Thus far, capital inflows into the United States have more than compensated for the deficit in the trade balance. This remedy is only temporary, however. The disproportionately high real interest rates in the U.S., compared to the rest of the world, caused the value of the dollar to rise and resulted in a flow of foreign capital into the U.S. The high value of the dollar give foreign imports a price advantage in U.S. markets and made U.S. exports more expensive abroad.

The balance of trade deficit has many adverse effects. First, many jobs have been lost in the U.S. domestic economy, and second, U.S. firms have lost both domestic and foreign sales. Third, the U.S. is now a debtor nation, a status which could impair our solvency and/or economic freedom of action in the future. Finally, foreign nations are losing capital they need at home because it is being used to finance U.S. deficits and consumption of imports. This hampers their ability to reach competitive, technological stature in world markets.

The most obvious action which can be taken to reduce the serious consequences of the present large trade deficit is to increase U.S. exports, particularly among small firms, which are now greatly under-represented in export markets. Other actions, such as reducing the federal deficit, cutting interest rates, and stabilizing the value of the dollar, will also help to cut down the deficit in the balance of trade, but these measures are contingent on political decisions. An increase in the exports of small firms however, is an individual initiative that can generate lasting broad benefits for both small business and the general U.S. economy. This article examines ways for smaller firms to play a greater role in exporting and considers the recent experience of several small firms in the export market.


Very small business firms (under ten employees) are unlikely to export due to cost and managerial constraints. However, small-to medium-sized firms (ten to 999 employees) now account for only 16 percent of exports, when potentially they could sell 51 percent of U.S. exports, according to a U.S. Department of Commernce study (see table 1).

Table 1 demonstrates that although exporting has been dominated by large firms (over 999 employees), there is great export potential for small- and mind-sized firms (ten to 999 employees). These facts do not appear to have changed substantially in the last decade, although hard, recent data is impossible to find.


The fundamental objective of the business firm is profit maximization. A survey of the empirical evidence regarding motives behind corporate multinationalism (a generic term covering much more than exports) by Guy V.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Exports: A Necessary Ingredient in the Growth of Small Business Firms


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?