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Innovation and Survival of Young French Firms

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  • DADAKPETE, David
  • DOSSA, Moïse

Abstract

Often described as a powerful strategy in inter-firm competition, innovation remains a timeless topic in economics. Although a large body of empirical literature finds evidence for an “innovation premium” (Cefis and Marsili, 2005) associated with better survival prospects for firms, numerous studies highlight the inherent risks associated with innovation activity, which could shorten a firm’s market longevity ("liability of innovativeness"(Deng et al., 2014)). This paper investigates whether the “innovation premium” or “liability of innovativeness” prevails among young French firms during their first five years. According to our estimates, the two effects seem to offset each other in most cases. Indeed, for three (process, product, organization) of the four types of innovation considered, no significant effect on firm survival is observed. However, for marketing innovation, the “liability of innovativeness” appears to prevail. Our estimates suggest that firms introducing marketing innovation upon market entry face an 11.3% higher risk of closure.

Suggested Citation

  • DADAKPETE, David & DOSSA, Moïse, 2025. "Innovation and Survival of Young French Firms," MPRA Paper 127936, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:127936
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    References listed on IDEAS

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    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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