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Firm age and the probability of product innovation. Do CEO tenure and product tenure matter?

Marco Cucculelli

No 140, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: This paper examines the influence that the age of a firm has on the probability of product innovation by taking into account two factors: the role of the CEO's tenure and the lifecycle of the last product introduced. In a sample of Italian manufacturing firms (n = 2,163), analysis reveals that the new entrants’ high innovative activity is mainly driven by the new CEO's innovation propensity, which is strictly dependent on his tenure. Likewise, the lower innovation activity observed in mature firms is mostly explained by the dynamics of the product’s lifecycle and the CEO's tenure. More generally, the existence of a negative relationship between innovation and firm age is questioned, as controlling for time-related variables that overlap during the company's lifecycle - product age and CEO's tenure — turns the relationship positive. Finally, the innovative behaviour of incumbent companies turns out to be dependent on the renewal abilities of newly appointed external CEOs, whereas, CEOs from within the family play a minor role.

Keywords: Product innovation; firm age; CEO tenure; product tenure; product lifecycle; industry lifecycle (search for similar items in EconPapers)
JEL-codes: D22 G34 L25 O32 (search for similar items in EconPapers)
Pages: 44
Date: 2017-09
New Economics Papers: this item is included in nep-bec, nep-ent, nep-eur, nep-ino, nep-sbm and nep-tid
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Journal Article: Firm age and the probability of product innovation. Do CEO tenure and product tenure matter? (2018) Downloads
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