Firm Age and Innovation

50 Pages Posted: 11 Dec 2008

See all articles by Natarajan Balasubramanian

Natarajan Balasubramanian

Syracuse University - Whitman School of Management

Jeongsik Lee

Drexel University - LeBow College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: October 24, 2007

Abstract

We examine how firm age relates to innovation quality, and how this relationship varies depending on the nature of technology. Using data on patents of COMPUSTAT firms, we find that firm age is negatively related to technical quality, and that this effect is greater in technologically active areas. The economic implication of this effect is substantial; each additional year reduces the impact of a 10% increase in R&D intensity on the firm's market value by more than 3%.

Keywords: firm age, innovation, technical quality, market value, patent

Suggested Citation

Balasubramanian, Natarajan and Lee, Jeongsik, Firm Age and Innovation (October 24, 2007). Industrial and Corporate Change, Vol. 17, No. 5, pp. 1019-1047, October 2007, Available at SSRN: https://ssrn.com/abstract=1314522

Natarajan Balasubramanian (Contact Author)

Syracuse University - Whitman School of Management ( email )

United States

Jeongsik Lee

Drexel University - LeBow College of Business ( email )

3141 Chestnut Street
Philadelphia, PA 19104
United States

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