2005/01 | LEM Working Paper Series | |
A Matter of Life and Death: Innovation and Firm Survival |
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Elena Cefis, Orietta Marsili |
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Keywords | ||
Firm Survival, Innovation, Firms Exit, Duration models.
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JEL Classifications | ||
O30, D21, C14, L25.
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Abstract | ||
This paper examines the effects of innovation on the survival of manufacturing firms in the
Netherlands. The demographics of firms according to their innovative performance and type
of innovation are traced by using the Business Register population of all firms active in the
Netherlands and the Community Innovation Survey. Through estimation of a parametric
duration model, we observe that firms do benefit of an innovation premium that extends their
life expectancy, independent of firm- specific traits such as age and size. Especially process
innovation seems to have a distinctive effect on survival. Furthermore, our results confirm
that survival chances increase with age and the growth rate of a firm, the latter representing a
more crucial factor than the initial size. Finally, sectors at high intensity of technology, that is,
science based and specialised suppliers are most favourable environments to the survival of
firms.
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