Does patenting always help new-firm survival?

Masatoshi Kato, Koichiro Onishi and Yuji Honjo
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Yuji Honjo: Faculty of Commerce, Chuo University

No 159, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: This study examines the role of patenting activities in new-firm survival, using a data set of firms founded from 2003 to 2010 in the Japanese manufacturing and software sectors. In particular, we distinguish the effects of patenting activities of chief executive officers (CEOs) from those of patenting activities of firms, taking into account exit routes: bankruptcy, voluntary liquidation, and merger. It is found that firms that engaged in patenting activities after start-up are less likely to go bankrupt. It is also found that firms whose CEOs have experience in patenting activities before start-up are less likely to go bankrupt. In contrast, we provide evidence that CEOs' involvement in patenting activities after start-up are not helpful for survival. Furthermore, the results based on subsamples according to firm age show that while firms' patenting activities do not increase the probability of survival in the early years since start-up, they help new firms surviving after a certain period of time since start-up. While CEOs' pre-entry patenting activities have a significant explanatory power in reducing the probability of bankruptcy within a certain period of time since start-up, they have no longer significant effect afterwards. Further, CEOs' patenting activities after start-up increase the probability of exit through bankruptcy and voluntary liquidation especially after a certain period of time since start-up.

Keywords: New firm; patenting; chief executive officer; survival; firm age (search for similar items in EconPapers)
Pages: 44 pages
Date: 2017-05, Revised 2017-05
New Economics Papers: this item is included in nep-bec, nep-ent, nep-ino, nep-ipr, nep-law, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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