Melbourne Institute Working Paper Series Database (1984 - 2010)

Melbourne Institute Working Paper No. 26/2006

Innovation, Technological Conditions and New Firm Survival

by

Paul H. Jensen, Elizabeth Webster and Hielke Buddelmeyer

Date: November 2006

Abstract: High neo-natal mortality is one of the most salient facts about firm performance in the industrial organization literature. We model firm survival and examine the relative influence of firm, industry and macroeconomic factors on survival for new vis--vis incumbent firms. In particular, we focus on how the intensity of innovation in each industry affects firm survival. Our results imply that while new firms, compared with incumbent firms, thrive in risky and innovative industries, they are also more susceptible to business cycle effects such as changes in the rate of growth of aggregate demand, interest rates and the availability of equity finance.

 

Downloads: PDF format (256K)