Internationalization and financial constraints: opportunities, obstacles, and strategies.

This study delves into the relationship between financial constraints and internationalization, investigating the role and extent of variability in access to the capital market in shaping internationalization strategic choices. In detail, focusing on the Italian manufacturing industry between 2013 and 2019, we examine this relation disentangling the effect between export and import dynamics. Initially, we run various OLS regression models to investigate the profile of exporting/importing firms, providing a preliminary picture of the internationalization process of the Italian manufacturing industry. Then, we run several GMM regression models to highlight these dynamics over time and to collect robust evidence for our hypotheses. According to the results, we observe that firms under high financial constraints have the lowest intensity of import and export flows (i), firms under moderate financial constraints have the highest intensity of export flows (ii), and firms under low financial constraints have the highest intensity of import flows (iii). An interpretation of these results concerns the heterogeneity of business-to-business payment dynamics across the EU global value chain, with the Italian market characterized by the longest delay. Hence, internationalization through export flows represents an opportunity for those companies with the most aggressive business strategies, quickly raising their internal liquidity, and complementing local financial debts with international trade credits. On the other hand, only firms with no restrictions to the capital market can afford prompt payments of foreign suppliers, easily collecting the necessary liquidity to support import flows.