Download This PaperInnovation, Technological Conditions and New Firm Survival
Melbourne Institute Working Paper No. 26/06
24 Pages Posted: 25 Nov 2006 Last revised: 10 Apr 2011
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
Paul H. Jensen (Contact Author)
University of Melbourne - Melbourne Institute of Applied Economic and Social Research ( email )
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Parkville, Victoria 3010
Australia
Elizabeth M. Webster
University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )
Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia
Hielke Buddelmeyer
Melbourne Institute ( email )
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Level 7
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Australia
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