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The effects of firms’ R&D and innovation activities on their survival: a competing risks analysis

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  • Pål Børing

Abstract

Using a data set of Norwegian firms, an examination is made of the relationship between firms’ R&D activities and their survival. A firm may exit the market through closure, or merger and acquisition (M&A). The analysis is based on a discrete time competing risks model with unobserved heterogeneity. We find that product-innovative firms have a higher probability of exit due to M&A, but only if they also introduce new products into their market. This highlights the importance of differentiating between different groups of product-innovative firms. None of the R&D and innovation activities considered has significant effects on the probability of firm closure. Copyright Springer-Verlag Berlin Heidelberg 2015

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  • Pål Børing, 2015. "The effects of firms’ R&D and innovation activities on their survival: a competing risks analysis," Empirical Economics, Springer, vol. 49(3), pages 1045-1069, November.
    • Handle: RePEc:spr:empeco:v:49:y:2015:i:3:p:1045-1069
    DOI: 10.1007/s00181-014-0901-z
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    Cited by:

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    3. Mehmet Ugur & Marco Vivarelli, 2021. "Innovation, firm survival and productivity: the state of the art," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 30(5), pages 433-467, July.
    4. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna, 2016. "Inverted-U relationship between R&D intensity and survival: Evidence on scale and complementarity effects in UK data," Research Policy, Elsevier, vol. 45(7), pages 1474-1492.
    5. Ortiz-Villajos, José M. & Sotoca, Sonia, 2018. "Innovation and business survival: A long-term approach," Research Policy, Elsevier, vol. 47(8), pages 1418-1436.
    6. Cefis, Elena & Bartoloni, Eleonora & Bonati, Marco, 2020. "Show me how to live: Firms' financial conditions and innovation during the crisis," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 63-81.
    7. Bai, Qing & Tian, Shaonan, 2020. "Innovate or die: Corporate innovation and bankruptcy forecasts," Journal of Empirical Finance, Elsevier, vol. 59(C), pages 88-108.
    8. Mehmet Ugur & Marco Vivarelli, 2020. "Technology, industrial dynamics and productivity: a critical survey," DISCE - Quaderni del Dipartimento di Politica Economica dipe0011, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    9. Zhang, Dongyang & Zheng, Wenping & Ning, Lutao, 2018. "Does innovation facilitate firm survival? Evidence from Chinese high-tech firms," Economic Modelling, Elsevier, vol. 75(C), pages 458-468.
    10. Mingqian Zhang & Pierre Mohnen, 2022. "R&D, innovation and firm survival in Chinese manufacturing, 2000–2006," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 59-95, March.

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    More about this item

    Keywords

    Competing risks model; Firm closure versus M&A; Firm survival; Innovation; Unobserved heterogeneity; C14; C41; O31;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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