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Does innovation facilitate firm survival? Evidence from Chinese high-tech firms

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  • Zhang, Dongyang
  • Zheng, Wenping
  • Ning, Lutao

Abstract

The impact of innovation mechanisms on firm survival remains inconclusive in the existing literature, especially when we consider the case of a rapidly growing emerging economy. Using a unique firm-level dataset of 14,065 Chinese high-tech start-ups from 2007 to 2013, we employ a discrete time hazard model to study the impact of differences in internal and external innovation mechanisms, specifically, innovation efficiency and spillover effect derived from trade, on the likelihood of firms' survival as these factors are currently less understood. Bigger and older technology-intensive firms tend to have lower probalility of exit. Our results suggest that innovation as measured by patents, innovation efficiency and firms' import and export activities can increase the survival rate of Chinese high-tech firms. This implies that policy makers should focus on promoting both internal and external innovation mechanisms to improve the survival of indigenous high-tech firms.

Suggested Citation

  • Zhang, Dongyang & Zheng, Wenping & Ning, Lutao, 2018. "Does innovation facilitate firm survival? Evidence from Chinese high-tech firms," Economic Modelling, Elsevier, vol. 75(C), pages 458-468.
    • Handle: RePEc:eee:ecmode:v:75:y:2018:i:c:p:458-468
    DOI: 10.1016/j.econmod.2018.07.030
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    More about this item

    Keywords

    Innovation; Patents; Survival; High-tech firms; China;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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