Firm Flexibility and Export Potential
A core task of the Trade Council of Denmark (TCD) is to help small and medium-sized enterprises export (Trade Council of Denmark, 2008). To succeed in this task, it must identify the challenges firms face when they export. In particular, exporting is risky. Market power reductions, exchange rate fluctuations, and constantly changing foreign preferences all increase the demand volatility faced by exporters. Successful exporters need to have ‡exible1 production structures in order to manage this increased volatility. Inflexible firms cannot adjust their productions quickly enough to manage. The volatility costs may outweigh the benefits from exporting.