Survivor: The Role of Innovation in Firms’ Survival

Elena Cefis, O. Marsili

    Research output: Working paperAcademic


    This paper explores the relationship between innovation and the survival of
    manufacturing firms in the Netherlands. The determinants of the survival probability of a firm, traditionally identified in the size and age of a firm, are extended to include the ability of a firm to introduce an innovation in the market. The empirical analysis combines economic and demographic data from the Business Register of the population of firms active in the Netherlands with data on innovation derived from the second Community Innovation Survey. The survival probability of a firm is estimated by using a non-parametric approach: Transition Probability Matrices were calculating over different time periods. We observe that, in general, innovation has a positive and significant effect on firms’ survival that increases as time lengthens.
    Furthermore, our results confirm that small and young firms are those most exposed to the risk of exit, but at the same time those that benefit most of innovation to survive in the market, especially in the longer term.
    Original languageEnglish
    PublisherUU USE Tjalling C. Koopmans Research Institute
    Number of pages29
    Publication statusPublished - Nov 2003

    Publication series

    NameDiscussion Paper Series / Tjalling C. Koopmans Research Institute
    ISSN (Electronic)2666-8238


    • Firm Survival
    • Innovation
    • Firms Exit
    • Transition Probability Matrices


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