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Surviving the times of crisis: does innovation make a difference?

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  • Oleg Sidorkin
  • Martin Srholec

Abstract

The recent economic crisis caught many by surprise. Yet some firms were better prepared to weather the downturn than others. Using a unique micro dataset of shareholding companies from emerging countries in Eastern and Southern Europe derived from the World Bank's Enterprise Surveys, we econometrically test the hypothesis that pre-crisis innovation affected their survival odds and performance thereafter. Overall, the results indicate that the innovation-survival connection holds. Nevertheless, firms that have been identified as innovating excessively before the crisis turned out to be far more likely to die, whereas cautious innovators came out better off. Firms that stretched their resources too much, that were too bold, faced dire consequences. If appetite for risky innovation is sociably desirable and the crisis weeds out viable businesses, including those that may drive the recovery, there is a role for public policy to mitigate the short-lived selection inefficiencies that proliferate during severe recessions.

Suggested Citation

  • Oleg Sidorkin & Martin Srholec, 2014. "Surviving the times of crisis: does innovation make a difference?," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 7(2), pages 124-146.
  • Handle: RePEc:ids:ijtlid:v:7:y:2014:i:2:p:124-146
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    Cited by:

    1. repec:taf:indinn:v:25:y:2018:i:1:p:53-83 is not listed on IDEAS
    2. Lin, Chia-Ling & Lin, Hui-Lin & Lin, Eric S., 2016. "Is There A Complementary Relationship Between Product And Process Innovation On Productivity In Taiwanese Manufacturing Firms?," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 57(2), pages 139-173, December.
    3. Grigorii V. Teplykh, 2018. "Innovations and productivity: the shift during the 2008 crisis," Industry and Innovation, Taylor & Francis Journals, vol. 25(1), pages 53-83, January.

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