Compensating for the liability of emergingness: agglomeration economies and firm heterogeneity in Colombian exports

Abstract

[EN] Although extant literature recognizes that agglomeration economies facilitate firms’ internationalization processes, research has scarcely addressed how firm heterogeneity conditions the absorption of these benefits in emerging markets. To address this gap, this study examines how export spillovers represent not only an efficiency advantage but also a compensatory mechanism to overcome the liability of emergingness amidst institutional voids. Additionally, it explores how internal firm-level attributes act as critical boundary conditions that dictate the absorption of these localized spillovers. This study applies a Probit model to an unbalanced panel of 50,997 observations of manufacturing companies in Colombia, gathered during 2015–2021. This methodological strategy controls for unobserved heterogeneity while allowing for the identification of time-invariant effects. The results reveal a dual dynamic, such that both intra- and inter-industrial agglomeration increase export probability, though their effects are asymmetrical. Whereas prior export experience can substitute for local information (validating Uppsala model), innovation capacity and size represent complements, which are necessary to address regional-level diversity. Although geographic location can help firms overcome the disadvantage of operating in emerging markets, its effectiveness depends on the firms’ own capabilities to internalize the available external knowledge. By contextualizing the distinct trajectory of Latin American latecomer firms, this research shifts the focus from passive spillover diffusion to active learning in emerging economies. It empirically demonstrates that geographic location serves as an informal proxy network that mitigates home-country disadvantages. Furthermore, it reveals a novel dual dynamic where internal firm attributes function either as substitutes for, or necessary complements to, localized external knowledge.