IBS Lunchtime Research Seminar - International Trade, Organizational Capital, and Interest Rates

You are cordially invited to attend an International Business and Strategy Departmental Research Meeting, during which there will be a presentation by Filomena Pietrovito, University of Molise. A reminder that attendance for IBS (full time, research oriented) staff and full-time students is compulsory, and where possible, must be in person. Individuals unable to attend in person, due to legitimate reasons will be provided a Teams link on request. Non-IBS staff are welcome to attend, but must register prior to the event. If you have not received the email invite please email Angie Clark

Please join us in Room 108, Henley Business School, if you would like to attend, please register using the link below:

Please make sure you let me know in advance if you intend to attend in person so that the correct amount of catering is booked.

Date: Wednesday 1st October 2025, HBS Room 108

Time: 13.00 - 14.30

Abstract:

Do interest rates affect firm-level choices of internationalization? We answer this question through both theoretical modeling and empirical analysis. First, we develop a dynamic heterogeneous-firm trade model `a la Melitz (2003) that incorporates two novel channels: (i) a temporal gap between export production costs and revenue realization, and (ii) a process of accumulation of organizational capital, which endogenously affects firm productivity. These mechanisms imply that higher interest rates reduce both firms’ extensive and intensive margin of internationalization, the more so for firms with
lower stock of organizational capital. Second, we test these predictions using detailed panel data on nearly 100,000 Portuguese firms from 2006 to 2022. We construct firm- level measures of organizational capital based on a proxy for selling, general, and administrative expenses, and assess the impact of changes in monetary policy rates on exports through fixed-effects regressions and pseudo-Poisson maximum likelihood estimation. Our results confirm that organizational capital significantly mitigates the negative effect of interest rates on export decisions. The findings underscore the policy relevance of fostering organizational capital as a buffer against adverse monetary shocks in open economies.