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A matter of life and death: innovation and firm survival

  • Elena Cefis
  • Orietta Marsili

This article examines the effects of innovation on survival using data on all manufacturing firms active in the Netherlands and the Community Innovation Survey. By estimating a parametric duration model, we show that firms benefit from an innovation premium that extends their life expectancy, independent of firm-specific traits such as age and size. Process innovation in particular seems to have a distinctive effect on survival. Furthermore, survival chances increase with the age and growth rate of a firm, the latter being more crucial than initial size. Finally, high intensity technology sectors are the most favorable to firm's survival. Copyright 2005, Oxford University Press.

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Article provided by Oxford University Press in its journal Industrial and Corporate Change.

Volume (Year): 14 (2005)
Issue (Month): 6 (December)
Pages: 1167-1192

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Handle: RePEc:oup:indcch:v:14:y:2005:i:6:p:1167-1192
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  1. Pakes, A. & Ericson, R., 1990. "Empirical Implications Of Alternative Models Of Firm Dynamics," Papers 594, Yale - Economic Growth Center.
  2. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
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  18. 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.
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