1,721,076 research outputs found
Revolving doors: entrepreneurial survival and exit
Full text linkThe high turbulence of new entrepreneurial ventures that are rapidly selected out at the fringe of the firm population has been emphasized using the "revolving doors" metaphor. However, well-planned exit strategies can be the root of entrepreneurial success and a mechanism to transfer novelty to established firms. The aim of this Special Issue is to highlight the multiple aspects of exit as part of the entrepreneurial process
Born to flip. Exit decisions of entrepreneurial firms in high-tech and low-tech industries
Full text linkThis paper examines the way that the exit behavior of entrepreneurial firms is shaped by their innovative capabilities, and the technology environment in which they operate. We distinguish between exit by closing down activity and exit by merger or acquisition (M&A). Using a large sample of Dutch manufacturing firms, we explore the relationship between firm exit, age and innovative capabilities, in high and low innovation intensive industries. We find that for entrepreneurial firms, innovation may go some way towards compensating for the liability of newness, but also makes them more attractive M&A targets. More specifically, entrepreneurial firms in high-tech industries do not seem to improve their chances of survival by innovating; when technological change is rapid, innovation, especially in products, is necessary to participate in the innovation race in an industry, but is not sufficient to guarantee survival. In contrast, in low-tech industries, process innovation is a critical condition for the survival of entrepreneurial firms. In this context, entrepreneurial firms that are able to bring new product ideas, introducing ‘exceptional’ variations into a stable environment, are most likely to exit by M&A, thereby transferring their knowledge and capabilities to the incumbent firms
Profit Differentials and Innovation
No full textThe article aims to investigate empirically the effects of innovative activities on corporate profitability, using a panel of 267 UK manufacturing firms, over the period 1988–1992. Using the Bayesian approach to, explicitly, consider heterogeneity among firms, we find: (i) a positive and well-determined effect of innovation on profits that smoothly decreases as time passes by; (ii) a difference in profitability between innovators and non-innovators, greater when the comparison is between persistent innovators and non-innovators; and (iii) a long-run persistence in profit differentials
Is there persistence in innovative activities?
No full textThis paper examines firm innovative persistence using patent applications of 577 UK manufacturing firms. Non-parametric techniques show the empirical distributions of patents are neither Geometric nor Poisson. There exists a threshold effect represented by the first patent: the probability to go from zero to one patent is uniformly much lower than from n to n+1 patents, with n<1. Transition Probability Matrices show little persistence in general, but strong persistence among 'great' innovators that account for a large proportion of patents requested: innovative activities, at least which are captured by patents, are persistent. There is heterogeneity across industrial and size classification
Make, buy, or both: the innovation sourcing strategy dilemma after M&A
No full textThis paper investigates the effects of mergers and acquisitions (M&A) on corporate research and development (R&D) strategies using firm-level data on the Spanish manufacturing sector. The focus of the study is to determine whether M&A affects R&D portfolios by increasing or decreasing innovation input, such as in-house R&D, external R&D or both. The results show that M&A has a negative and significant impact on R&D intensity, decreasing in-house R&D and external technological sourcing. M&A enables the rationalization of R&D capacity, implying a decrease in R&D efforts. M&A negatively affects both types of R&D, but, on average, the effect is more negative on external R&D
Crossing the innovation threshold through mergers and acquisitions
Full text linkFirms are resorting more and more to mergers and acquisitions (M&A) to bridge the gap between where they are and where they would like to be in relation to innovation and performance. This paper investigates whether involvement in M&A triggers distinct patterns of innovative behaviour across firms, and whether this effect is conditional on firm size. The analysis combines data from four waves of the Community Innovation Survey (CIS) and the Business Register of Dutch manufacturing firms. We observe that M&As influence the probability that firms will begin innovation activities or persist with them, and these effects vary at different points in the firm size distribution. In particular, by using M&A firms are able to persist with the innovation efforts and output over time, and this effect is especially strong for large firms. For small firms, M&A help them to cross the ‘innovation threshold’, increasing the probability of the transition from a non-innovator to an active innovator. However, the M&A effect does not mitigate the tendency of small firms to be occasional innovators
Firm size and growth rate variance: the effects of data truncation
Full text linkThis paper discusses the effects of the existence of natural and/or exogenously imposed thresholds in firm size distributions on estimations of the relation between firm size and the variance in firm growth rates. We argue that these estimations are upwardly biased whenever the threshold operates on the same proxy that is used to calculate the growth rates. We show the potential impact of the bias on simulated data, suggest a methodology to improve these estimations, and present an empirical analysis on Dutch firms. The only stable relation that emerges is the negative relationship between firm size and growth rate variance
Good times, bad times: innovation and survival over the business cycle
Full text linkIn times of crisis, policy makers call upon entrepreneurship as a remedy to an economic downturn. Yet, at these times new firms face intensified selection and survival hinges on heterogeneous capabilities. We examine how the founding innovative capabilities of new ventures created in the Netherlands in 2001-2006 affected their survival likelihood before, during and after the 2007-2008 global financial crisis. We estimate a piecewise exponential model linking survival times, from 2001 to 2015, to longitudinal innovation data from the Community Innovation Survey (CIS). New firms innovating within two years from their founding enjoy a long-term adaptive survival premium during and after the crisis. This premium and its duration over the stages of the crisis are contingent to the form of innovation: technological innovations entail a more effective and enduring premium, as compared to non-technological innovations, which can be even detrimental for survival
Going, going, gone: exit forms and the innovative capabilities of firms
Full text linkAlthough innovation is essential to build a competitive advantage and survive in the long run, some firms choose to exit, through mergers and acquisitions (M&As), or radically change their business portfolio and identity. This paper examines how innovative capabilities influence the decision of a firm to exit, among business closure, M&A, and radical restructuring. Using an analysis of a large and rich panel of Dutch manufacturing firms, we find that product and process innovation are equally important to lower the probability to close down activities, and this effect is stronger when product and process innovations are pursed in combination. We also find that process innovation reduces the probability of exit by radical restructuring, while product innovation, when not supported by process innovation, especially increases the probability of exit by M&As. Our findings suggest that exit strategies are intimately bound to the nature and synergies of innovative efforts
Survivor: the role of innovation in firms' survival
No full textThis paper explores the relationship between innovation and the survival probability of manufacturing firms in the Netherlands, conditional on firm age and size. The empirical analysis combines firm level data on innovation, derived from the second Community Innovation Survey, and on the date of exit, from the Business Register of all firms active in the Netherlands. To estimate the survival probability of a firm we use a non-parametric approach, based on the calculation of Transition Probability Matrices over different time periods. The results show that innovation has a positive and significant effect on the probability of firms’ survival. This effect increases over time and is conditional on firm age and size; we observe that small and young firms are the most exposed to the risk of exit, as found in earlier studies, but also those that most benefit of innovation to survive in the market, especially in the longer term
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