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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

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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

Suggested Citation

  • 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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    More about this item

    Keywords

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

    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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