Human resources – central to the internationalization of French companies (Policy Brief 269 - March 2012)
We’ve known for several years that improving the capacity of small and medium-sized French companies so that they can grow and eventually enter the global market is one of the main drivers for strengthening the French industry.
- Human resources key to the internationalization of French firms
Among the many factors that cause certain difficulties for SMCs, high production costs and inadequate efforts in innovation is frequently emphasized. Regardless of the explanation (price competitiveness versus non-price competitiveness), we show that access to a skilled workforce is central to the issue.
An analysis of a group of about 12 000 independent companies and French organizations during the period 2002-2007 reveals that the degree of internationalization of a company is connected to the skill qualifications of the workforce employed. All things equal, the share of managers and engineers increases with the degree of integration in global markets. This reinforcement of the skills of the labour force reflects mainly that the decrease in jobs is directly related to the production process. Indeed, internationalization (whether in the form of imports, exports or other foreign branches) requires business functions and managements to develop because they are relatively intensive in skilled labor.
By studying companies that export or expand abroad for the first time more thoroughly, we will identify factors that ease their international expansion. An increase in employees’ skills appears to be a prerequisite for exporting and making direct investments abroad. We also show that the use of foreign suppliers enables companies to improve their knowledge of foreign markets and the efficiency of their production process, thus promoting the transition to becoming an exporter.
Summary
- Globalization and employment: the challenges of a microeconomic approach
- Considerable heterogeneity of firms based on their international status
- Internationalization accompanied by a rise of skilled jobs
- Determinants for international development
- Appendix 1 - Sources and Definitions
- Appendix 2 - Estimation of changes in the structure of labor associated with internationalization
- Appendix 3 - Estimated probability that a firm becomes an exporter or sets up abroad
- Authors: Estelle Dhont-Peltrault, Centre d'analyse stratégique, Department of Economics and Financial Affairs and Alexandre Gazaniol, Pramex International and University Paris-Dauphine - LEDa
Press Contact:
Jean-Michel Roullé, Head of Communications
Tel. +33 (0)1 42 75 61 37 - jean-michel.roulle@strategie.gouv.fr