Innovation and survival of new firms in Chinese manufacturing, 2000-2006

Zhang M. and Pierre Mohnen

No 2013-057, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: Using a large dataset of over 100,000 Chinese firms created between 2000 and 2006, we explore whether there is a link between innovation effort RD or innovation output the share of innovative sales and the firms duration of survival. We estimate a complementary log-log model with time-varying explanatory variables controlling for individual heterogeneity. We find that innovative firms tend to survive longer, more so because of RD than because of introducing new products. There seems to be an inverted-U relationship between RD or innovation output and long-term survival, suggesting that too much RD or product innovation can cause firms to die, perhaps because of excessive risk. Survival has a cyclicalbehaviour, and it varies across provinces. It also varies with ownership. State-owned firms have a higher hazard rate than privately-owned firms, which have a higher hazard rate than foreign-owned firms.

Keywords: Firm Performance; Size; Diversification; Scope; Technological Change; Government Policy (search for similar items in EconPapers)
JEL-codes: L25 O38 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-com, nep-cse, nep-ent, nep-ino, nep-knm, nep-sbm, nep-tid and nep-tra
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2013057

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