Sciences Po Spire - Product Innovation and Survival in a High-Tech Industry

Type:		Working paper

Title:		Product Innovation and Survival in a High-Tech Industry

Author(s):		Nesta, Lionel - Centre de recherche en économie de Sciences Po (Author) Fontana, Roberto (Author)

Date issued:		2007-10

Series:		Documents de travail de l'OFCE : 2007-30

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 located near the frontier are also more likely to be acquired than to exit by failure if they cannot survive. This suggests that product location in the technology space acts as a signal of firm quality. Possessing a substantial stock of intangible capital, on the other hand, determines neither exit via failure nor exit via acquisition, although it increases the probability of surviving.

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