A Matter of Life and Death: Innovation and Firm Survival
January 2004
Research Paper
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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.
- O32 : Management of Technological Innovation and R&D
- M : Business Administration and Business Economics; Marketing; Accounting
- L22 : Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates
- M13 : New Firms; Startups
- survival
- innovation
- innovator
- survival time
- model
- firm survival
- process
- effect
- product
- survival probability
- firm size
- analysis
- probability
- function
- growth
- business
- variable
- netherland
- community innovation survey
- process innovators
