Template-type: ReDIF-Paper 1.0
Author-Name: Zhang, Mingqian
Author-Workplace-Name: Shanghai International Studies University
Author-Name: Mohnen, Pierre
Author-Email: mohnen@merit.unu.edu
Author-Workplace-Name: UNU-MERIT / MGSoG
Title: Innovation and survival of new firms in Chinese manufacturing, 2000-2006
Abstract: 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.
Classification-JEL: L25, O32, O38 
Keywords: firm survival, complementary log-log duration models, China,  innovation 
Series: UNU-MERIT Working Papers
Creation-Date: 2013
Number: 057
File-URL: http://www.merit.unu.edu/publications/wppdf/2013/wp2013-057.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2013057