A Matter of Life and Death: Innovation and Firm Survival

Elena Cefis and Orietta Marsili

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: This paper examines the effects of innovation on the survival of manufacturing firms in the Netherlands. The demographics of firms according to their innovative performance and type of innovation are traced by using the Business Register population of all firms active in the Netherlands and the Community Innovation Survey. Through estimation of a parametric duration model, we observe that firms do benefit of an innovation premium that extends their life expectancy, independent of firm- specific traits such as age and size. Especially process innovation seems to have a distinctive effect on survival. Furthermore, our results confirm that survival chances increase with age and the growth rate of a firm, the latter representing a more crucial factor than the initial size. Finally, sectors at high intensity of technology, that is, science based and specialised suppliers are most favourable environments to the survival of firms.

Keywords: duration models; firm survival; firms exit; innovation (search for similar items in EconPapers)
JEL-codes: L22 M M13 O32 (search for similar items in EconPapers)
Date: 2004-01-01
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Citations: View citations in EconPapers (2)

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Journal Article: A matter of life and death: innovation and firm survival (2005)
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