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Innovation and survival of new firms in Chinese manufacturing, 2000-2006

Author

Listed:
  • Zhang M.
  • Mohnen P.

    (UNU-MERIT)

Abstract

Using a large dataset of over 100,000 Chinese firms created between 2000 and 2006, we explore whether there is a link between innovation effort RD or innovation output the share of innovative sales and the firms duration of survival. We estimate a complementary log-log model with time-varying explanatory variables controlling for individual heterogeneity. We find that innovative firms tend to survive longer, more so because of RD than because of introducing new products. There seems to be an inverted-U relationship between RD or innovation output and long-term survival, suggesting that too much RD or product innovation can cause firms to die, perhaps because of excessive risk. Survival has a cyclicalbehaviour, and it varies across provinces. It also varies with ownership. State-owned firms have a higher hazard rate than privately-owned firms, which have a higher hazard rate than foreign-owned firms.

Suggested Citation

  • Zhang M. & Mohnen P., 2013. "Innovation and survival of new firms in Chinese manufacturing, 2000-2006," MERIT Working Papers 057, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2013057
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    File URL: https://www.merit.unu.edu/publications/wppdf/2013/wp2013-057.pdf
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    References listed on IDEAS

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    Cited by:

    1. Daniele Moschella & Federico Tamagni & Xiaodan Yu, 2017. "Persistent high-growth firms in China's manufacturing," LEM Papers Series 2017/03, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Howell, Anthony, 2015. "‘Indigenous’ innovation with heterogeneous risk and new firm survival in a transitioning Chinese economy," Research Policy, Elsevier, vol. 44(10), pages 1866-1876.

    More about this item

    Keywords

    Firm Performance; Size; Diversification; Scope; Technological Change; Government Policy;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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