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Firm dynamics of hi-tech start-ups: Does innovation matter?

Dongyang Zhang, Liqun Zhuge and Richard Freeman ()

China Economic Review, 2020, vol. 59, issue C

Abstract: Innovation plays a vital role in corporate issues since it brings potentially appreciable profits and shores up their statuses in certain fields, although it may also harness firms, especially smaller ones, with high survival risks. This concern brings forth our research topic: will participating in innovation activities diminish small firms' risk of exit from the market? Our paper concentrates on hi-tech start-ups and complements existing firm dynamic studies by adopting a comprehensive annual survey dataset from a considerable science park located in Beijing. Using an efficient discrete-time proportional hazards model, and thanks to extensive data available, we can take a deeper investigation into this topic. Our research complies with most of the previous studies that show that the benefit from innovativeness outweighs the cost and we solidify our conclusions by considering a few distinctive features existing in China's economy.

Keywords: Firm dynamics; Start-up; Innovativeness; Discrete-time proportional hazards model (search for similar items in EconPapers)
JEL-codes: O31 M13 G33 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.chieco.2019.101370

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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