'Indigenous' innovation with heterogeneous risk and new firm survival in a transitioning Chinese economy

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29 Scopus citations

Abstract

This paper explores how heterogenous risk drives the firm innovation-survival relationship using a large sample of new entrepreneurial firms in China. Results show that innovation increases the probability of survival, although the impact on firm survival is conditioned by the timing of the innovation, the characteristics associated with the innovation strategy, along with the level of risk embodied in the innovation process. Cautious innovators are found to survive longer and contribute to a higher social welfare via gains in firm efficiency. In contrast, risky innovators are less likely to survive, are less efficient, and are only sometimes compensated for their risk in terms of higher profits. Results therefore show that other factors besides higher payoffs force some firms to engage in riskier innovation strategies.

Original languageEnglish (US)
Pages (from-to)1866-1876
Number of pages11
JournalResearch Policy
Volume44
Issue number10
DOIs
StatePublished - Dec 2015
Externally publishedYes

Keywords

  • China
  • Firm profits
  • Firm survival
  • Heterogeneous risk
  • Innovation
  • TFP

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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