Life Cycle, Innovation and Firm Productivity: Israeli Manufacturing Firms,1955-1999

Haim Regev

Annals of Economics and Statistics, 2005, issue 79-80, 405-431

Abstract: In this paper an attempt was made to study the age effect on firm productivity during its life cycle. More generally, the paper focuses on two issues. First, it presents and describes the construction of a longitudinal panel, a very extensive data set consisting of some 48,000 observations on about 5,800 firms over the period 1955 to 1999. Second, it presents production functions estimates focusing on the effects of age and cohort on productivity. The main findings show that the process of growth and aging that a firm experiences, from founding to possible death - what we call the age or life cycle effect - does indeed influence productivity. These findings show, among others things, that the age effect is considerably higher and more significant in the group of innovative firms; that mergers and acquisitions play an important role during a firm's life cycle, and that market structure, measured by concentration and import penetration rates, may also play an important role in shaping a firm's life cycle.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2005:i:79-80:p:405-431

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