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A Matter of Life and Death: Innovation and Firm Survival

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Author Info
Elena Cefis
Orietta Marsili
Abstract

This paper examines the effects of innovation on the survival of manufacturing firms in the Netherlands. The demographics of firms according to their innovative performance and type of innovation are traced by using the Business Register population of all firms active in the Netherlands and the Community Innovation Survey. Through estimation of a parametric duration model, we observe that firms do benefit of an innovation premium that extends their life expectancy, independent of firm- specific traits such as age and size. Especially process innovation seems to have a distinctive effect on survival. Furthermore, our results confirm that survival chances increase with age and the growth rate of a firm, the latter representing a more crucial factor than the initial size. Finally, sectors at high intensity of technology, that is, science based and specialised suppliers are most favourable environments to the survival of firms.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2005/01.

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Date of creation: 05 Feb 2005
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Handle: RePEc:ssa:lemwps:2005/01

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Related research
Keywords: Firm Survival; Innovation; Firms Exit; Duration models.;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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.:
  1. Wagner, Joachim, 1994. "The Post-entry Performance of New Small Firms in German Manufacturing Industries," Journal of Industrial Economics, Blackwell Publishing, vol. 42(2), pages 141-54, June. [Downloadable!] (restricted)
  2. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Blackwell Publishing, vol. 42(3), pages 227-45, September. [Downloadable!] (restricted)
  3. Colombo, Massimo G. & Delmastro, Marco, 2001. "Technology use and plant closure1," Research Policy, Elsevier, vol. 30(1), pages 21-34, January. [Downloadable!] (restricted)
  4. David Audretsch & Patrick Houweling & A. Thurik, 2000. "Firm Survival in the Netherlands," Review of Industrial Organization, Springer, vol. 16(1), pages 1-11, February. [Downloadable!] (restricted)
  5. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Blackwell Publishing, vol. 62(1), pages 53-82, January. [Downloadable!] (restricted)
  6. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May. [Downloadable!] (restricted)
  7. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March. [Downloadable!] (restricted)
  8. Pakes, Ariel & Ericson, Richard, 1998. "Empirical Implications of Alternative Models of Firm Dynamics," Journal of Economic Theory, Elsevier, vol. 79(1), pages 1-45, March. [Downloadable!] (restricted)
  9. Guimaraes, Paulo & Mata, José & Portugal, Pedro, 1995. "The Survival of New Plants: Start-up Conditions and Post-entry Evolution," CEPR Discussion Papers 1203, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  10. Elena Cefis & Orietta Marsili, 2003. "Survivor: The Role of Innovation in Firm's Survival," Working Papers 03-18, Utrecht School of Economics. [Downloadable!]
  11. 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. [Downloadable!] (restricted)
  12. P.A. Geroski & José Mata & Pedro Portugal, 2007. "Founding Conditions and the Survival of New Firms," DRUID Working Papers 07-11, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
  13. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Blackwell Publishing, vol. 35(4), pages 583-606, June. [Downloadable!] (restricted)
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  14. Pakes, A. & Ericson, R., 1990. "Empirical Implications Of Alternative Models Of Firm Dynamics," Papers 594, Yale - Economic Growth Center.
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  15. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December. [Downloadable!] (restricted)
  16. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December. [Downloadable!] (restricted)
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(explanations, 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.)

  1. Nikolinka Fertala, 2008. "The shadow of death: do regional differences matter for firm survival across native and immigrant entrepreneurs?," Empirica, Springer, vol. 35(1), pages 59-80, March. [Downloadable!] (restricted)
  2. Christian Helmers & Mark Rogers, 2008. "Innovation and the Survival of New Firms Across British Regions," Economics Series Working Papers 416, University of Oxford, Department of Economics. [Downloadable!]
  3. Miguel Manjón-Antolín & Josep-Maria Arauzo-Carod, 2008. "Firm survival: methods and evidence," Empirica, Springer, vol. 35(1), pages 1-24, March. [Downloadable!] (restricted)
  4. Cristiana Benedetti Fasil, 2009. "Product and Process Innovation in a Growth Model of Firm Selection," Economics Working Papers ECO2009/30, European University Institute. [Downloadable!]
  5. Hielke Buddelmeyer & Paul H. Jensen & Elizabeth Webster, 2006. "Innovation and the Determinants of Firm Survival," Melbourne Institute Working Paper Series wp2006n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
    Other versions:
  6. Serguei Kaniovski & Michael Peneder, 2008. "Determinants of firm survival: a duration analysis using the generalized gamma distribution," Empirica, Springer, vol. 35(1), pages 41-58, March. [Downloadable!] (restricted)
  7. Giulio Bottazzi & Marco Grazzi & Angelo Secchi & Federico Tamagni, 2007. "Assessing the Impact of Credit Ratings and Economic Performance on Firm Default," LEM Papers Series 2007/15, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  8. Cefis, E. & Marsili, O., 2007. "Going, Going, Gone. Innovation and Exit in Manufacturing Firms," Research Paper ERS-2007-015-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  9. Erik Stam & Roy Thurik & Peter van der Zwan, 2008. "Entrepreneurial Exit in Real and Imagined Markets," Tinbergen Institute Discussion Papers 08-031/3, Tinbergen Institute, revised 31 Dec 2008. [Downloadable!]
    Other versions:
  10. Elena Cefis & Anna Sabidussi & Hans Schenk, 2007. "Do Mergers of Potentially Dominant Firms foster Innovation? An Empirical Analysis for the Manufacturing Sector," Working Papers 07-20, Utrecht School of Economics. [Downloadable!]
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