Innovation, Technological Conditions and New Firm Survival

Jensen, Paul H.; Webster, Elizabeth; Buddelmeyer, Hielke

doi:10.2139/ssrn.946827

Innovation, Technological Conditions and New Firm Survival

Melbourne Institute Working Paper No. 26/06

24 Pages Posted: 25 Nov 2006 Last revised: 10 Apr 2011

See all articles by Paul H. Jensen

Paul H. Jensen

University of Melbourne - Melbourne Institute of Applied Economic and Social Research

Elizabeth Webster

Swinburne University of Technology; University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Hielke Buddelmeyer

Melbourne Institute; IZA Institute of Labor Economics

There are 2 versions of this paper

Date Written: November 1, 2006

Abstract

High neo-natal mortality is one of the most salient 'facts' about firm performance in the industrial organization literature. We model firm survival and examine the relative influence of firm, industry and macroeconomic factors on survival for new vis-à-vis incumbent firms. In particular, we focus on how the intensity of innovation in each industry affects firm survival. Our results imply that while new firms, compared with incumbent firms, thrive in risky and innovative industries, they are also more susceptible to business cycle effects such as changes in the rate of growth of aggregate demand, interest rates and the availability of equity finance.

Keywords: Hazard functions, Firm survival, Innovation, Technological change

JEL Classification: O31, L25

Suggested Citation: Suggested Citation

Jensen, Paul H. and Webster, Elizabeth M. and Buddelmeyer, Hielke, Innovation, Technological Conditions and New Firm Survival (November 1, 2006). Melbourne Institute Working Paper No. 26/06, Available at SSRN: https://ssrn.com/abstract=946827 or http://dx.doi.org/10.2139/ssrn.946827