Product Innovation and Survival in a High-Tech Industry

Product Innovation and Survival in a High-Tech Industry We investigate the relationship between product innovation and firm survival for a sample of 121 firms in a high-tech industry. We find that location near the technological frontier is an important determinant of firm survival. Firms that are located near the frontier are also more likely to be acquired than to exit by liquidation if they cannot survive as free-standing enterprises. This suggests that product location in the technology space acts as a signal of firm quality. Greater R&D efforts increase the probability of surviving; in the event that the firm does exit, however, its R&D efforts do not significantly influence whether it exits via acquisition or exits via liquidation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Product Innovation and Survival in a High-Tech Industry

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Publisher
Springer US
Copyright
Copyright © 2009 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-009-9210-7
Publisher site
See Article on Publisher Site

Abstract

We investigate the relationship between product innovation and firm survival for a sample of 121 firms in a high-tech industry. We find that location near the technological frontier is an important determinant of firm survival. Firms that are located near the frontier are also more likely to be acquired than to exit by liquidation if they cannot survive as free-standing enterprises. This suggests that product location in the technology space acts as a signal of firm quality. Greater R&D efforts increase the probability of surviving; in the event that the firm does exit, however, its R&D efforts do not significantly influence whether it exits via acquisition or exits via liquidation.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jul 7, 2009

References

  • Technological regimes, industrial demography and the evolution of industrial structures
    Audretsch, D.
  • Evolution on the shoulders of giants: Entrepreneurship and firm survival in the German laser industry
    Buenstorf, G.
  • Product entry in a fast growing industry: The LAN switch market
    Fontana, R.; Nesta, L.
  • Firm productivity in Israeli industry 1979–1988
    Griliches, Z.; Regev, H.

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