Does primary strategy matter? A study of small Australian manufacturing firms

The survival crisis of small manufacturing firms is most often blamed on cheap imports. However the real debate should centre on how to turnaround a 20th century small business culture of low innovation and domestic penetration to “international engagement”. We utilise panel data to demonstrate that when innovation is combined with international engagement they provide a statistically significant value added advantage. In particular we find support for the contention that export as an activity does not offer any performance benefit to the firm. We also demonstrate the dangers of drawing business policy conclusions from even high quality cross-sectional panel data.