Working Paper #2013-057
Innovation and survival of new firms in Chinese manufacturing, 2000-2006
Using a large dataset of over 100,000 Chinese firms created between 2000
and 2006, we explore whether there is a link between innovation effort
(R&D) or innovation output (the share of innovative sales) and the
firm's duration of survival. We estimate a complementary log-log model
with time-varying explanatory variables controlling for individual
heterogeneity. We find that innovative firms tend to survive longer,
more so because of R&D than because of introducing new products. There
seems to be an inverted-U relationship between R&D or innovation output
and long-term survival, suggesting that too much R&D or product
innovation can cause firms to die, perhaps because of excessive risk.
Survival has a cyclical behaviour, and it varies across provinces. It
also varies with ownership. State-owned firms have a higher hazard rate
than privately-owned firms, which have a higher hazard rate than
foreign-owned firms.
- Keywords
-
- firm survival
- complementary log-log duration models
- China
- innovation
- JEL codes
-
- L25
- O38
Cite this as
APA 7th ed.Zhang, M., & Mohnen, P. (2013). Innovation and survival of new firms in Chinese manufacturing, 2000-2006 (UNU-MERIT Working Paper No. 2013-057). UNU-MERIT. https://unu-merit.nl/publications/working-papers/abstract/?id=5021