Firm resources and response to a negative export shock: 2014 Russian embargo on the Western food exporters
Authors: Mathias Juust, Urmas Varblane (University of Tartu)
Wednesday, Oct 25, 2023 at 14.00-15.00 Narva Rd 18 - 1017 and Zoom
This study examines the effects of the 2014 Russian food embargo against the West on Estonian exporters. The quantitative part one quantifies the embargo effect on the exports and productivity of Estonian firms affected, finding that this trade shock induced trade diversion that was higher for firms with higher initial productivity and exposure to the Russian market. The qualitative part two investigates the firm-level responses of three major embargoed Estonian dairy producers that had a high dependence on the Russian market before 2014. We find that conducting effective innovation activities and adjusting in response to the embargo was more successful for firms with a more diverse set of pre-embargo resources and capabilities, especially regarding strategic management and business networks.