Strategic hedging: Evidence from Brazilian exporters

摘要

How and why do exporters adjust their portfolios of destination countries in response to exchange rate movements? How do such geographic export diversification choices affect firm performance? Drawing on the corporate strategy and international business literature, we argue that firms enjoying low exchange rate competitiveness can increase their performance by expanding their exports to different world regions and vice versa. Studying a panel of Brazilian exporters during the years 2001-2010 and using a system of moderated mediation models with firm, industry and period fixed effects, we find that unrelated geographic diversification of exports is more effective than related diversification in counteracting exchange rate pressures.