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Metropolitan innovation, firm size, and business survival in a high-tech industry

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  • Alexandra Tsvetkova

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  • Jean-Claude Thill

    ()

  • Deborah Strumsky

    ()

Abstract

This paper contributes to the growing body of business survival literature that focuses on regional determinants of the hazard faced by firms. Using parametric survival analysis, we test the effects of regional innovation on exit likelihood in the US computer and electronic product manufacturing during the 1992–2008 period. The novelty of our approach is in conditioning the effects of metropolitan innovation on firm size. Estimation results suggest a negative relationship between metropolitan patenting activity and survival of firms that started with 1–3 employees. This effect decreases if companies grow. Establishments with more than 4 employees at start-up are insensitive to metropolitan innovation, although size of firms that started with 4–9 employees improves their survival chances. These findings indicate that local knowledge spillovers do not translate into lower hazard. The negative relationship indicates either a creative destruction regime or decisions of entrepreneurs to shut down existing ventures in order to pursue other opportunities. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Alexandra Tsvetkova & Jean-Claude Thill & Deborah Strumsky, 2014. "Metropolitan innovation, firm size, and business survival in a high-tech industry," Small Business Economics, Springer, vol. 43(3), pages 661-676, October.
  • Handle: RePEc:kap:sbusec:v:43:y:2014:i:3:p:661-676
    DOI: 10.1007/s11187-014-9550-z
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    Cited by:

    1. Tsvetkova, Alexandra, 2016. "Do diversity, creativity and localized competition promote endogenous firm formation? Evidence from a high-tech US industry," MPRA Paper 72349, University Library of Munich, Germany.
    2. Damien Rousselière, 2017. "A flexible approach to age dependence in organizational mortality. Comparing the life duration for cooperative and non-cooperative enterprises using a Bayesian Generalized Additive Discrete Time Survi," Working Papers SMART - LERECO 17-08, INRA UMR SMART-LERECO.
    3. Hien Tran & Enrico Santarelli & Enrico Zaninotto, 2015. "Efficiency or bounded rationality? Drivers of firm diversification strategies in Vietnam," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 983-1010, November.
    4. ALARCON-OSUNA, Moises Alejandro & DIAZ-PEREZ, Claudia del Carmen, 2014. "The Technology Based Sectors In Mexico: An Analysis For The Firm Size And The Production Scale," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 23(4), pages 40-60.
    5. Rousselière, Damien, 2017. "A flexible approach to age dependence in organizational mortality. Comparing the life duration of cooperative and non-cooperative enterprises using a Bayesian Generalized Additive Discrete Time Surviv," Working Papers 264214, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    6. repec:wsi:wschap:9781786343482_0001 is not listed on IDEAS
    7. Iwona Markowicz, 2015. "Duration Analysis of Firms – Cohort Tables and Hazard Function," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(11), pages 36-47, November.
    8. repec:eee:respol:v:47:y:2018:i:8:p:1418-1436 is not listed on IDEAS
    9. Tsvetkova, Alexandra & Thill, Jean-Claude & Conroy, Tessa, 2016. "Firm patenting activity, metropolitan innovative environment and their effects on business survival in a high-tech industry," MPRA Paper 75783, University Library of Munich, Germany.
    10. European Commission, Directorate-General for Competition (Brussels) (ed.), 2016. "Ex-post evaluation of the impact of restructuring aid decisions on the viability of aided (non-financial) firms: Final report," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 130514, November.
    11. 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.
    12. Joern H. Block & Christian O. Fisch & Mirjam van Praag, 2016. "The Schumpeterian Entrepreneur: A Review of the Empirical Evidence on the Antecedents, Behavior, and Consequences of Innovative Entrepreneurship," Tinbergen Institute Discussion Papers 16-072/VII, Tinbergen Institute.
    13. David Devins & George Lodorfos & Ioannis Kostopoulos & Don Webber, 2017. "Innovation And Growth In The City Region: Microeconomic Evidence Of Asymmetries," World Scientific Book Chapters,in: Promoting Innovation in New Ventures and Small- and Medium-Sized Enterprises, chapter 1, pages 3-27 World Scientific Publishing Co. Pte. Ltd..

    More about this item

    Keywords

    Business survival; Metropolitan innovation; Survival analysis; Computer and electronic product manufacturing; C41; L26; L63; R1;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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