Innovation and survival of new firms in Chinese manufacturing, 2000-2006
AbstractUsing a large dataset of over 100,000 Chinese firms created between 2000 and 2006, we explore whether there is a link between innovation effort (R&D) or innovation output (the share of innovative sales) and the firm's duration of survival. We estimate a complementary log-log model with time-varying explanatory variables controlling for individual heterogeneity. We find that innovative firms tend to survive longer, more so because of R&D than because of introducing new products. There seems to be an inverted-U relationship between R&D or innovation output and long-term survival, suggesting that too much R&D or product innovation can cause firms to die, perhaps because of excessive risk. Survival has a cyclical behaviour, and it varies across provinces. It also varies with ownership. State-owned firms have a higher hazard rate than privately-owned firms, which have a higher hazard rate than foreign-owned firms.
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 United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 057.
Date of creation: 2013
Date of revision:
firm survival; complementary log-log duration models; China; innovation;
Find related papers by JEL classification:
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-29 (All new papers)
- NEP-COM-2013-11-29 (Industrial Competition)
- NEP-CSE-2013-11-29 (Economics of Strategic Management)
- NEP-ENT-2013-11-29 (Entrepreneurship)
- NEP-INO-2013-11-29 (Innovation)
- NEP-KNM-2013-11-29 (Knowledge Management & Knowledge Economy)
- NEP-SBM-2013-11-29 (Small Business Management)
- NEP-TID-2013-11-29 (Technology & Industrial Dynamics)
- NEP-TRA-2013-11-29 (Transition Economics)
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.:
- Heckman, J & Singer, B, 1984. "The Identifiability of the Proportional Hazard Model," Review of Economic Studies, Wiley Blackwell, vol. 51(2), pages 231-41, April.
- Roberto Fontana & Lionel Nesta, 2009.
"Product Innovation and Survival in a High-Tech Industry,"
Review of Industrial Organization,
Springer, vol. 34(4), pages 287-306, June.
- Roberto Fontana & Lionel Nesta, 2007. "Product Innovation and Survival in a High-Tech Industry," Documents de Travail de l'OFCE 2007-30, Observatoire Francais des Conjonctures Economiques (OFCE).
- Roberto Fontana & Lionel Nesta, 2007. "Product Innovation and Survival in a High-Tech Industry," KITeS Working Papers 208, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Dec 2007.
- Lionel Nesta & Roberto Fontana, 2007. "Product Innovation and Survival in a High-Tech Industry," Sciences Po publications 2007-30, Sciences Po.
- 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.
- Agarwal, Rajshree & Audretsch, David B, 2001. "Does Entry Size Matter? The Impact of the Life Cycle and Technology on Firm Survival," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 21-43, March.
- Han, Aaron & Hausman, Jerry A, 1990. "Flexible Parametric Estimation of Duration and Competing Risk Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(1), pages 1-28, January-M.
- Hielke Buddelmeyer & Paul H. Jensen & Elizabeth Webster, 2010. "Innovation and the determinants of company survival," Oxford Economic Papers, Oxford University Press, vol. 62(2), pages 261-285, April.
- Cefis, Elena & Marsili, Orietta, 2006. "Survivor: The role of innovation in firms' survival," Research Policy, Elsevier, vol. 35(5), pages 626-641, June.
- Fernandes, Ana M. & Paunov, Caroline, 2012. "The risks of innovation : are innovating firms less likely to die ?," Policy Research Working Paper Series 6103, The World Bank.
- Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-50, August.
- Griliches, Zvi & Regev, Haim, 1995. "Firm productivity in Israeli industry 1979-1988," Journal of Econometrics, Elsevier, vol. 65(1), pages 175-203, January.
- 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.
- Pei-Chou Lin & Deng-Shing Huang, 2008. "Technological Regimes and Firm Survival: Evidence Across Sectors and Over Time," Small Business Economics, Springer, vol. 30(2), pages 175-186, February.
- Audretsch, David B., 1995. "Innovation, growth and survival," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 441-457, December.
- Hall, Bronwyn H, 1987.
"The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 35(4), pages 583-606, June.
- Bronwyn H. Hall, 1986. "The Relationship Between Firm Size and Firm Growth in the U.S. Manufacturing Sector," NBER Working Papers 1965, National Bureau of Economic Research, Inc.
- Bruce D. Meyer, 1988.
"Unemployment Insurance And Unemployment Spells,"
NBER Working Papers
2546, National Bureau of Economic Research, Inc.
- 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.
- Doms, Mark & Dunne, Timothy & Roberts, Mark J., 1995. "The role of technology use in the survival and growth of manufacturing plants," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 523-542, December.
- Clayton M. Christensen & Fernando F. Suárez & James M. Utterback, 1998. "Strategies for Survival in Fast-Changing Industries," Management Science, INFORMS, vol. 44(12-Part-2), pages S207-S220, 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.
- 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.
- Harald Strotmann, 2007. "Entrepreneurial Survival," Small Business Economics, Springer, vol. 28(1), pages 87-104, January.
- White, Lawrence J, 1982. "The Determinants of the Relative Importance of Small Business," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 42-49, February.
- Andrew B. Bernard & Fredrik Sjoholm, 2003. "Foreign Owners and Plant Survival," NBER Working Papers 10039, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ad Notten).
If references are entirely missing, you can add them using this form.