Innovation and Firm Growth: Does Firm Age Play a Role?

30 Pages Posted: 8 Jun 2013

See all articles by Alex Coad

Alex Coad

Waseda University

Agusti Segarra Blasco

Rovira i Virgili University

Mercedes Teruel

Rovira i Virgili University

Date Written: June 8, 2013

Abstract

This paper explores the relationship between firm growth, innovation and firm age. We hypothesize that young firms undertake riskier innovation activities and are more oriented towards employment growth than towards harvesting returns in the form of sales growth. Using an extensive sample of Community Innovation Survey for the period 2004-2010, we apply quantile regressions and a Heckman sample selection technique to study the impact of R&D activities on firm growth according to firm age. Our results show that R&D intensity is positively associated with firm growth. However, for young firms R&D shows an increasing influence across the quantiles, while for old firms R&D shows a stable or perhaps decreasing effect over the quantiles. Firm age shows a significant negative impact among young firms, while for the sample of old firms the impact of firm age becomes non-significant. Our Heckman estimations show the evolution of the impact of the R&D on firm growth confirming a significant impact on sales and productivity growth, while the impact is negligible for employment growth.

Keywords: firm age, firm growth, innovation, quantile regression

JEL Classification: L25, L20

Suggested Citation

Coad, Alex and Blasco, Agusti Segarra and Teruel, Mercedes, Innovation and Firm Growth: Does Firm Age Play a Role? (June 8, 2013). Available at SSRN: https://ssrn.com/abstract=2276414 or http://dx.doi.org/10.2139/ssrn.2276414

Alex Coad (Contact Author)

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

Agusti Segarra Blasco

Rovira i Virgili University ( email )

Av. Universitat 1
Tarragona, Tarragona 43204
Spain

Mercedes Teruel

Rovira i Virgili University ( email )

Av. Universitat 1
Tarragona, Tarragona 43204
Spain

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