Impact of Product Quality on Export Flows: A Firm-Level Analysis of Pakistan

Abstract

Purpose- This study focuses on examining the connection between product quality and export flow at the firm level of Pakistan as high-quality products play an important role in raising domestic as well as foreign sales.

Design/methodology/approach- It uses unbalanced panel data for non-financial firms that are listed on the Pakistan Stock Exchange. The Fixed Effect Model is used as an estimation technique for the period of years 1999-2019.

Findings- The study reveals that product quality plays a significant role in to increase of all types of sales such as local sales, export sales, and total sales. Product quality has a direct and strong impact on a firm’s sales at both domestic and international levels. Our results are robust having incorporated two dummies for size and entry in the model.

Originality/Value- This study contributes to the previous studies by analyzing the role of product quality in determining the export flow of an economy. These findings can help policymakers in the implementation of such measures and processes through which the producer and investor m can increase its product quality such as the provision of R&D funds and financial aid programs for new investors.