A matter of life and death: innovation and firm survival

Cefis, Elena; Marsili, Orietta

doi:10.1093/icc/dth081

Cited by 381 publications

(249 citation statements)

References 46 publications

Supporting

Mentioning

225

Contrasting

Unclassified

Order By: Relevance

“…However, this is a first indication that innovation might not support growth and survival of firms in a transition economy. This stands in contrast to the usual empirical results estimated for firms in non-transition countries (Hall, 1987, Cefis andMarsili, 2006). We are not aware of a study that directly compares non-transition and transition countries.…”

contrasting

confidence: 76%

R&D and Firm Performance in a Transition Economy

Czarnitzki

Kraft

2006

Kyklos

View full text Add to dashboard Cite

Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp06033.pdf Non-technical SummaryDue to outcome uncertainty of R&D investments, it is a-priori unclear whether innovative activity leads to improved firm performance. The market value model represents a possibility to measure the returns to innovation by relating the valuation of firms at the stock market to R&D investment. The market value model has the advantage of bundling information and expectations concerning future firm values. It has the disadvantage that only a minority of companies can be used for this empirical test, as only a small share of firms in the business sector universe are publicly traded at stock markets.As a complement to the market value approach, we propose the use of credit ratings which are available for almost every company. Credit ratings are not only based on current but also on future profits, as in many cases borrowers and other remittees have long-run connections to a firm in question. In addition, we use the future payment behavior as a variable describing default risk. Payment behavior is classified according to the average duration until payments are actually conducted. This variable ranges from "payments always being in time" to the worst possible scenario, which is bankruptcy.The major purpose of this study is a comparison of R&D in Western and Eastern German firms with respect to its relationship to our proxy variables for financial returns. It turns out that investing in R&D is good for Western German firms and bad for East-German firms.While R&D contributes positively to future ratings in the West, the opposite is true in the East. Apparently the effect of risk when investing in R&D outweighs the potential benefits. If the receipt of subsidies is taken into account, R&D still influences ratings positively in the West. In Eastern Germany, R&D is at least not negatively affecting the credit rating, when firms obtain public money for such investments.As a further step, we analyze future financial distress in order to test whether Eastern German companies are simply discriminated by the rating agency, or if they indeed face higher risk of bankcruptcy or defaults when engaging in R&D. The results show that Eastern German firms seem to have significantly more difficulties to translate R&D into viable products or costreducing processes. If R&D is conducted, they suffer higher likelihood of future financial distress and finally bankruptcy. In the case of subsidized R&D, we do not witness this negative...

show abstract

contrasting

confidence: 76%

R&D and Firm Performance in a Transition Economy

Czarnitzki

Kraft

2006

Kyklos

View full text Add to dashboard Cite

show abstract

“…Research considering the particular characteristics of industries have suggested a number of influences that are often interrelated: the level of competition, clustering, stage of industry cycle, technological intensiveness, barriers to entry, as well as demand conditions and a minimum efficient scale (Cefis and Marsili 2005;Fritsch, Brixy, and Falck 2006;Helmers and Rogers 2008;Wennberg and Lindqvist 2010;Raspe and van Oort 2011). In terms of competition, where entry and exit costs are higher and involve a greater sunk component, the probability of failure is reduced (Helmers and Rogers 2008;Fotopoulos and Louri 2000).…”

Section: Please Insert Figure 2 About Herementioning

confidence: 99%

Entrepreneurship and the determinants of firm survival within regions: human capital, growth motivation and locational conditions

Huggins

Prokop

Thompson

2017

Entrepreneurship & Regional Development

116

View full text Add to dashboard Cite

Despite a growing body of research on firm survival, little is known about the factors impacting upon survival rates at a micro-spatial level. This study, therefore, analyses firm survival across local environments in the context of a peripheral region; namely, the case of Wales in the UK. It examines how theories relating to human capital, growth motivation and locational conditions may explain survival within a region. Drawing on data of survival patterns for a cohort of firms, it is found that each of the three theories at least partly explain firm survival, with it being clear that human capital relating to the experience of entrepreneurs, as well as the growth motivation of their firms resulting from the strategic choices they make, impact upon rates of survival. It is also found that the local environment contributes to the likelihood of its survival. In particular, it is found that locational factors have a potential influence on the human capital allocated to enterprise, as well as how this capital is utilised via growth motivation. This suggests that not only do locational factors contribute to differing rates of entrepreneurship, but that such factors also impact on the durability of firms over time. Abstract Despite a growing body of research on firm survival, little is known about the factors impacting upon survival rates at a micro-spatial level. This study, therefore, analyses firm survival across local environments in the context of a peripheral region; namely, the case of Wales in the UK. It examines how theories relating to human capital, growth motivation and locational conditions may explain survival within a region. Drawing on data of survival patterns for a cohort of firms, it is found that each of the three theories at least partly explain firm survival, with it being clear that human capital relating to the experience of entrepreneurs, as well as the growth motivation of their firms resulting from the strategic choices they make, impact upon rates of survival. It is also found that the local environment contributes to the likelihood of its survival. In particular, it is found that locational factors have a potential influence on the human capital allocated to enterprise, as well as how this capital is utilised via growth motivation. This suggests that not only do locational factors contribute to differing rates of entrepreneurship, but that such factors also impact on the durability of firms over time.

show abstract

“…Some researchers (Mata et al, 1995) argue that, in some sectors, new firms have a greater capacity to find a place in the market and remain there. In short, the rate of survival appears to be linked with the level of technology of each sector, so that firms involved in activities that are more innovation intensive are in a better position to maintain their market position over time (Cefis and Marsili, 2005).…”

Section: Technology-based Firms and Survivalmentioning

confidence: 99%

Firm survival: The role of incubators and business characteristics

Más‐Verdú

Soriano

Roig‐Tierno

2015

Journal of Business Research

211

105

View full text Add to dashboard Cite

The main objective of this research is to analyze the impact of business incubatorson the survival of their associated firms. Using a configurational comparative method, the fuzzy-set qualitative comparative analysis (fs/QCA), it also examines whether the degree of business innovation, size, sector of activity and export activity affect firm survival. One of the most notable conclusions from this analysis is that the survival of a firm is related with at least some of the following characteristics: the firm must be technology-based, its productive focus is on goods (rather than on services), or that it is located within the specific environment of A business incubator.

show abstract

A matter of life and death: innovation and firm survival

Cited by 381 publications

References 46 publications

R&D and Firm Performance in a Transition Economy

R&D and Firm Performance in a Transition Economy

Entrepreneurship and the determinants of firm survival within regions: human capital, growth motivation and locational conditions

Firm survival: The role of incubators and business characteristics

Contact Info

Product

Resources

About