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Old firms and new products: Does experience increase survival?

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  • Studnicka, Zuzanna
  • Lawless, Martina

Abstract

We examine the relationship between exporting experience and the duration of firm export product flows. We find that more experienced firms (in years of exporting) show a higher probability of failure associated with the introduction of new products. On the other hand, firms with broader export scope are more likely to have better survival times for newly launched products. Although apparently counter-intuitive, we show that this finding is consistent with models of multi-product firms in which firms begin exporting by launching the products closest to their core competency and gradually expand their range of products by exporting those that are further away from their core, resulting in lower survival probability for later products. Validating this interpretation, we show that the distance of the new products to the core competency of the firm plays an important role in determining the survival of new products.
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Suggested Citation

  • Studnicka, Zuzanna & Lawless, Martina, 2018. "Old firms and new products: Does experience increase survival?," Papers WP584, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp584
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    JEL classification:

    • F10 - International Economics - - Trade - - - General

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