Is Aaron A. Aardvark an exporter?

Following on from my post earlier this week about solving alphabetic discrimination in economics, it appears that economics isn't the only place where such discrimination exists. A recent article by Hua Cheng (Peking University), Cui Hu (Central University of Finance and Economics, China), and Ben Li (Boston College), published in the Journal of International Economics (no ungated version, but there are some presentation slides available here), looks at the case of exporters in China. This is a really nice paper because of the way they tried to identify the alphabetic effects, by exploiting the fact that Chinese companies have two names and hence two different alphabetic rankings - one in English and one in Chinese. As Cheng et al. explain:

The first character has a character rank determined by the Chinese lexicography (number of strokes), and a romanization rank determined by the English lexicography (modern English alphabet). By interacting (i) the character rank with every foreign market's language proximity to Chinese, and (ii) the romanization rank with every foreign market's language proximity to English, we formulate a dual difference-in-differences strategy to estimate how a lexicographically earlier (according to either rank) firm name generates advantages in foreign markets that speak more proximate (to either language) languages.

Cheng et al. hypothesise that firms with names earlier in the Roman alphabet will have an advantage in exporting to countries with greater language proximity to English, and firms with names earlier in the Chinese lexicography will have an advantage in exporting to countries with greater language proximity to Chinese. Using Chinese customs data from all export transactions over the period from 2004 to 2013, they find that:

...firms with lexicographically earlier character names export more to destination countries that have greater language proximities to Chinese, while firms with lexicographically earlier romanized names export more to destination countries that have greater language proximities to English. Such lexicographic biases are especially strong among exporters with low visibility in their businesses. Quantitatively, when an exporter moves down the lexicographic ranks from the 25th percentile to the 75th percentile, and meanwhile the foreign market's language proximity increases from the 25th percentile to the 75th percentile, its export volume decreases by one to 3%.

The effects are not huge, but they are statistically significant - there is 'alphabetic' discrimination for exporting firms. Why would that be the case? As the above quote notes, the effects are especially strong for firms with low visibility in their industry. Cheng et al. note that:

Lexicographic ranks supposedly matter more for obscure firms. The most established firms in a market are unlikely to be harmed by having an initial Y or Z in their names. A visual “first come, first served” seems to be a natural routine for importers who search obscure firms.

Do importers really search for exporting firms from an alphabetical list? While Cheng et al. do find some evidence that supports this, it would be interesting to see more support for this. In the meantime though, it appears that not only is Aaron A. Aardvark becoming a well-respected economist, but Aardvark Enterprises is becoming a top exporter (to English-speaking countries, at least).