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Product Innovation and Survival in a High-Tech Industry

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  • Roberto Fontana

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  • Lionel Nesta

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Abstract

We investigate the relationship between product innovation and firm survival for a sample of 121 firms in a high-tech industry. We find that location near the technological frontier is an important determinant of fim survival. Firms located near the frontier are also more likely to be acquired than to exit by failure if they cannot survive. This suggests that product location in the technology space acts as a signal of firm quality. Possessing a substantial stock of intangible capital, on the other hand, determines neither exit via failure nor exit via acquisition, although it increases the probability of surviving.
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  • Roberto Fontana & Lionel Nesta, 2009. "Product Innovation and Survival in a High-Tech Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(4), pages 287-306, June.
  • Handle: RePEc:kap:revind:v:34:y:2009:i:4:p:287-306 DOI: 10.1007/s11151-009-9210-7
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    Cited by:

    1. Ma, Xingliang & Shi, Guanming, 2010. "GM vs. Non-GM: A Survival Analysis of Hybrid Seed Corn in the US," Staff Paper Series 553, University of Wisconsin, Agricultural and Applied Economics.
    2. Roberto Fontana & Lorenzo Zirulia, 2015. "“…then came Cisco, and the rest is history”: a ‘history friendly’ model of the Local Area Networking industry," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 875-899, November.
    3. Euy-Young Jung & Chulwoo Baek & Jeong-Dong Lee, 2012. "Product survival analysis for the App Store," Marketing Letters, Springer, vol. 23(4), pages 929-941, December.
    4. Canfei He & Qi Guo & David Rigby, 2015. "Industry Relatedness, Agglomeration Externalities and Firm Survival in China," Papers in Evolutionary Economic Geography (PEEG) 1528, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2015.
    5. repec:kap:sbusec:v:49:y:2017:i:4:d:10.1007_s11187-017-9858-6 is not listed on IDEAS
    6. Masatoshi Kato & Yuji Honjo, 2015. "Entrepreneurial human capital and the survival of new firms in high- and low-tech sectors," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 925-957, November.
    7. Zhang M. & Mohnen P., 2013. "Innovation and survival of new firms in Chinese manufacturing, 2000-2006," MERIT Working Papers 057, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Cefis, Elena & Marsili, Orietta, 2012. "Going, going, gone. Exit forms and the innovative capabilities of firms," Research Policy, Elsevier, vol. 41(5), pages 795-807.
    9. Masatoshi Kato & Koichiro Onishi & Yuji Honjo, 2017. "Does patenting always help new-firm survival?," Discussion Paper Series 159, School of Economics, Kwansei Gakuin University, revised May 2017.
    10. Sophie Pommet, 2013. "The impact of venture capital investment duration on the survival of French IPOs," Working Papers halshs-00923957, HAL.
    11. Kim, Jungho & Lee, Chang-Yang, 2016. "Technological regimes and firm survival," Research Policy, Elsevier, vol. 45(1), pages 232-243.
    12. Chassagnon, Virgile & Haned, Naciba, 2015. "The relevance of innovation leadership for environmental benefits: A firm-level empirical analysis on French firms," Technological Forecasting and Social Change, Elsevier, vol. 91(C), pages 194-207.
    13. repec:spr:chfecr:v:4:y:2016:i:1:d:10.1186_s40589-016-0044-9 is not listed on IDEAS
    14. Deng, Ziliang & Guo, Honglin & Zhang, Weifu & Wang, Chengqi, 2014. "Innovation and survival of exporters: A contingency perspective," International Business Review, Elsevier, vol. 23(2), pages 396-406.
    15. Sophie Pommet, 2013. "The Impact of Venture Capital Investment Duration on the Survival of French IPOs," GREDEG Working Papers 2013-32, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    16. Tobias Ebert & Thomas Brenner & Udo Brixy, 2015. "New Firm Survival: The Interdependence between Regional Externalities and Innovativeness," Working Papers on Innovation and Space 2015-05, Philipps University Marburg, Department of Geography.
    17. Ma, Xingliang & Shi, Guanming, 2013. "GM vs. Non-GM: A Survival Analysis of U.S. Hybrid Seed Corn," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(3), December.
    18. Hajjem, Olfa & Ayadi, Mohamed & Garrouste, Pierre, 2011. "Complementarities between organizational changes, R&D activity and technological cooperation for the French manufacturing firms," MPRA Paper 34617, University Library of Munich, Germany.
    19. Oscarina Conceição & Ana Paula Faria, 2014. "Determinants of research-based spin-offs survival," NIPE Working Papers 21/2014, NIPE - Universidade do Minho.
    20. repec:eee:touman:v:36:y:2013:i:c:p:377-390 is not listed on IDEAS
    21. Prajogo, Daniel I., 2016. "The strategic fit between innovation strategies and business environment in delivering business performance," International Journal of Production Economics, Elsevier, vol. 171(P2), pages 241-249.
    22. Canfei He & Rudai Yang, 2016. "Determinants of Firm Failure: Empirical Evidence from China," Growth and Change, Wiley Blackwell, vol. 47(1), pages 72-92, March.
    23. Efrat, Kalanit & Shoham, Aviv, 2012. "Born global firms: The differences between their short- and long-term performance drivers," Journal of World Business, Elsevier, vol. 47(4), pages 675-685.
    24. Broström, Anders & Lööf, Hans & Nabavi, Pardis, 2016. "Inherited Advantage and Spinoff Success," Working Paper Series in Economics and Institutions of Innovation 437, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    25. Fontana, Roberto & Vezzulli, Andrea, 2016. "Technological leadership and persistence in product innovation in the Local Area Network industry 1990–1999," Research Policy, Elsevier, vol. 45(8), pages 1604-1619.

    More about this item

    Keywords

    Competing risk model; High-technology industries; Firm survival; Market positioning; Quality frontier; L10; O33; D49;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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