Using a panel data set of Austrian service exporting firms this paper examines the determinants of service exports at the
firm- and destination country level. We implement a random effects Heckman sample selection firm‐level gravity model as well
as a fixed effects Poisson model. Expected firm‐level service exports are decomposed into the intensive and extensive margins
of adjustment as a response to counterfactual changes. We find market demand to be a key determinant. Results also suggest
high service export potentials due to regulatory reform in partner countries within the EU. Adjustments at the extensive margin
only play a marginal role. Increases in firm size as well as changes in distance related costs are most effective in developing
new export relationships in services.
