Innovation and the Determinants of Firm Survival
AbstractWhile many firms compete through the development of new technologies and products, it is well known that new-to-the-world innovation is inherently risky and therefore may increase the probability of firm death. However, many existing studies consistently find a negative association between innovative activity and firm death. We argue that this may occur because authors fail to distinguish between innovation investments and innovation capital. Using an unbalanced panel of over 290,000 Australian companies, we estimate a piecewise-constant exponential hazard rate model to examine the relationship between innovation and survival and find that current innovation investments increase the probability of death while innovation capital lowers it.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2006n15.
Length: 31 pages
Date of creation: Jul 2006
Date of revision:
Contact details of provider:
Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
Web page: http://www.melbourneinstitute.com/
More information through EDIRC
Other versions of this item:
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-21 (All new papers)
- NEP-BEC-2006-07-21 (Business Economics)
- NEP-COM-2006-07-21 (Industrial Competition)
- NEP-CSE-2006-07-21 (Economics of Strategic Management)
- NEP-ENT-2006-07-21 (Entrepreneurship)
- NEP-INO-2006-07-21 (Innovation)
- NEP-MIC-2006-07-21 (Microeconomics)
- NEP-TID-2006-07-21 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Elena Cefis & Orietta Marsili, 2005. "A matter of life and death: innovation and firm survival," Industrial and Corporate Change, Oxford University Press, vol. 14(6), pages 1167-1192, December.
- Silviano Pérez & Amparo Llopis & Juan Llopis, 2004. "The Determinants of Survival of Spanish Manufacturing Firms," Review of Industrial Organization, Springer, vol. 25(3), pages 251-273, 08.
- Baldwin, John R. & Rafiquzzaman, Mohammed, 1995.
"Selection versus evolutionary adaptation: Learning and post-entry performance,"
International Journal of Industrial Organization,
Elsevier, vol. 13(4), pages 501-522, December.
- Baldwin, John R. Raffiquzzaman, Mohammed, 1995. "Selection Versus Evolutionary Adaptation: Learning and Post-entry Performance," Analytical Studies Branch Research Paper Series 1994072e, Statistics Canada, Analytical Studies Branch.
- Raquel Ortega-Argilés & Rosina Moreno, 2005.
"Firm Competitive Strategies And The Likelihood Of Survival - The Spanish Case,"
ERSA conference papers
ersa05p347, European Regional Science Association.
- Raquel Ortega-ArgilÃ©s & Rosina Moreno, 2007. "Firm Competitive Strategies and the Likelihood of Survival. The Spanish Case," Papers on Entrepreneurship, Growth and Public Policy 2007-05, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July.
- Peter Thompson & Steven Klepper, 2003.
"Submarkets and the Evolution of Market Structure,"
0303, Florida International University, Department of Economics.
- Wagner, S. & Cockburn, I., 2010.
"Patents and the survival of Internet-related IPOs,"
Elsevier, vol. 39(2), pages 214-228, March.
- Audretsch, David B., 1995. "Innovation, growth and survival," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 441-457, December.
- David B. Audretsch & Erik E. Lehmann, 2004. "The Effects of Experience, Ownership, and Knowledge on IPO Survival: Empirical Evidence from Germany," Papers on Entrepreneurship, Growth and Public Policy 2004-20, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- Agustí Segarra & Maria Callejón, 2002. "New Firms' Survival and Market Turbulence: New Evidence from Spain," Review of Industrial Organization, Springer, vol. 20(1), pages 1-14, February.
- Mario Cleves & William W. Gould & Roberto G. Gutierrez & Yulia Marchenko, 2010. "An Introduction to Survival Analysis Using Stata," Stata Press books, StataCorp LP, edition 3, number saus3, October.
- Rajshree Agarwal & Michael Gort, 2002. "Firm and Product Life Cycles and Firm Survival," American Economic Review, American Economic Association, vol. 92(2), pages 184-190, May.
- Peter Thompson, 2005.
"Selection and Firm Survival: Evidence from the Shipbuilding Industry, 1825-1914,"
The Review of Economics and Statistics,
MIT Press, vol. 87(1), pages 26-36, February.
- Peter Thompson, 2004. "Selection and Firm Survival: Evidence from the Shipbuilding Industry, 1825-1914," Working Papers 0404, Florida International University, Department of Economics.
- Dunne, T. & Roberts, M.J. & Samuelson, L., 1988.
"Pattenrs Of Firm Entry And Exit In U.S. Manufacturing Industries,"
1-88-2, Pennsylvania State - Department of Economics.
- Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter.
- Janvier D. Nkurunziza, 2005. "Credit Can Precipitate Firm Failure: Evidence from Kenyan Manufacturing in the 1990s," CSAE Working Paper Series 2005-04, Centre for the Study of African Economies, University of Oxford.
- Florian Heiss & Jens Köke, 2004.
"Dynamics in Ownership and Firm Survival: Evidence from Corporate Germany,"
European Financial Management,
European Financial Management Association, vol. 10(1), pages 167-195.
- Heiss, Florian & Köke, Jens, 2001. "Dynamics in ownership and firm survival: evidence from corporate Germany," ZEW Discussion Papers 01-63, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Elena Cefis & Orietta Marsili, 2005. "A Matter of Life and Death: Innovation and Firm Survival," LEM Papers Series 2005/01, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Jaap H. Abbring & Gerard J. Van Den Berg, 2007.
"The unobserved heterogeneity distribution in duration analysis,"
Biometrika Trust, vol. 94(1), pages 87-99.
- Jaap H. Abbring & Gerard J. van den Berg, 2006. "The Unobserved Heterogeneity Distribution in Duration Analysis," Tinbergen Institute Discussion Papers 06-059/3, Tinbergen Institute.
- Abbring, Jaap H & van den Berg, Gerard J, 2007. "The Unobserved Heterogeneity Distribution in Duration Analysis," CEPR Discussion Papers 6219, C.E.P.R. Discussion Papers.
- David B. Audretsch & A. Roy Thurik, 1999. "Innovation, Industry Evoluation and Employment," Tinbergen Institute Discussion Papers 99-068/3, Tinbergen Institute.
- Van den Berg, Gerard J., 2000.
"Duration Models: Specification, Identification, and Multiple Durations,"
9446, University Library of Munich, Germany.
- Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460 Elsevier.
- Audretsch, David B & Mahmood, Talat, 1995. "New Firm Survival: New Results Using a Hazard Function," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 97-103, February.
- Klepper, Steven & Simons, Kenneth L, 1997. "Technological Extinctions of Industrial Firms: An Inquiry into Their Nature and Causes," Industrial and Corporate Change, Oxford University Press, vol. 6(2), pages 379-460, March.
- Roberto Fontana & Lionel Nesta, 2007. "Entry, Innovation and Exit. Evidence from the LAN switch Industry," Documents de Travail de l'OFCE 2007-02, Observatoire Francais des Conjonctures Economiques (OFCE).
- Steven Klepper & Kenneth L. Simons, 2000. "The Making of an Oligopoly: Firm Survival and Technological Change in the Evolution of the U.S. Tire Industry," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 728-760, August.
- Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Entry, Exit and Establishment Survival in UK Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 51(1), pages 91-112, 03.
- Santarelli, Enrico & Vivarelli, Marco, 2006.
"Entrepreneurship and the Process of Firms’ Entry, Survival and Growth,"
IZA Discussion Papers
2475, Institute for the Study of Labor (IZA).
- Enrico Santarelli & Marco Vivarelli, 2007. "Entrepreneurship and the process of firms’ entry, survival and growth," Industrial and Corporate Change, Oxford University Press, vol. 16(3), pages 455-488, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jenny Chen).
If references are entirely missing, you can add them using this form.