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A Matter of Life and Death: Innovation and Firm Survival

34 Pages Posted: 26 Aug 2006  

Elena Cefis

University of Bergamo - Department of Economics; Utrecht University - Tjalling C. Koopmans Research Institute

O. Marsili

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Date Written: January 2004 1,

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.

Keywords: firm survival, innovation, firms exit, duration models

JEL Classification: M, M13, L22, O32

Suggested Citation

Cefis, Elena and Marsili, O., A Matter of Life and Death: Innovation and Firm Survival (January 2004 1,). ERIM Report Series Reference No. ERS-2004-109-ORG. Available at SSRN: https://ssrn.com/abstract=650832

Elena Cefis

University of Bergamo - Department of Economics ( email )

via dei Caniana 2
Bergamo, 24127
Italy

HOME PAGE: http://www.elena-cefis.it

Utrecht University - Tjalling C. Koopmans Research Institute ( email )

Adam Smith Building
Kriekenpitplein 21-22
Utrecht, 3584 EC
Netherlands

Orietta Marsili (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
+31 10 408 9508 (Phone)
+31 10 408 9015 (Fax)

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