A matter of life and death: innovation and firm survival

This article examines the effects of innovation on survival using data on all manufacturing firms active in the Netherlands and the Community Innovation Survey. By estimating a parametric duration model, we show that firms benefit from an innovation premium that extends their life expectancy, independent of firm-specific traits such as age and size. Process innovation in particular seems to have a distinctive effect on survival. Furthermore, survival chances increase with the age and growth rate of a firm, the latter being more crucial than initial size. Finally, high intensity technology sectors are the most favorable to firm’s survival.