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Surviving the times of crisis : Does innovation make a difference?

Sidorkin, Oleg and Srholec, Martin LU (2014) In International Journal of Technological Learning, Innovation and Development 7(2). p.124-146
Abstract

The recent economic crisis caught many by surprise. Yet some firms were better prepared to weather the downturn than others. Using a unique micro dataset of shareholding companies from emerging countries in Eastern and Southern Europe derived from the World Bank's Enterprise Surveys, we econometrically test the hypothesis that pre-crisis innovation affected their survival odds and performance thereafter. Overall, the results indicate that the innovation-survival connection holds. Nevertheless, firms that have been identified as innovating excessively before the crisis turned out to be far more likely to die, whereas cautious innovators came out better off. Firms that stretched their resources too much, that were too bold, faced dire... (More)

The recent economic crisis caught many by surprise. Yet some firms were better prepared to weather the downturn than others. Using a unique micro dataset of shareholding companies from emerging countries in Eastern and Southern Europe derived from the World Bank's Enterprise Surveys, we econometrically test the hypothesis that pre-crisis innovation affected their survival odds and performance thereafter. Overall, the results indicate that the innovation-survival connection holds. Nevertheless, firms that have been identified as innovating excessively before the crisis turned out to be far more likely to die, whereas cautious innovators came out better off. Firms that stretched their resources too much, that were too bold, faced dire consequences. If appetite for risky innovation is sociably desirable and the crisis weeds out viable businesses, including those that may drive the recovery, there is a role for public policy to mitigate the short-lived selection inefficiencies that proliferate during severe recessions.

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author
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Eastern Europe, Economic crisis, Exit, Innovation, Micro data, Southern Europe, Survival
in
International Journal of Technological Learning, Innovation and Development
volume
7
issue
2
pages
23 pages
publisher
Inderscience Enterprises Ltd.
external identifiers
  • Scopus:84915731660
ISSN
1753-1942
DOI
10.1504/IJTLID.2014.065881
language
English
LU publication?
no
id
fdbfe19e-6c70-4bc2-b09c-eef0d16074a8
date added to LUP
2016-05-18 13:16:00
date last changed
2017-01-01 08:26:08
@article{fdbfe19e-6c70-4bc2-b09c-eef0d16074a8,
  abstract     = {<p>The recent economic crisis caught many by surprise. Yet some firms were better prepared to weather the downturn than others. Using a unique micro dataset of shareholding companies from emerging countries in Eastern and Southern Europe derived from the World Bank's Enterprise Surveys, we econometrically test the hypothesis that pre-crisis innovation affected their survival odds and performance thereafter. Overall, the results indicate that the innovation-survival connection holds. Nevertheless, firms that have been identified as innovating excessively before the crisis turned out to be far more likely to die, whereas cautious innovators came out better off. Firms that stretched their resources too much, that were too bold, faced dire consequences. If appetite for risky innovation is sociably desirable and the crisis weeds out viable businesses, including those that may drive the recovery, there is a role for public policy to mitigate the short-lived selection inefficiencies that proliferate during severe recessions.</p>},
  author       = {Sidorkin, Oleg and Srholec, Martin},
  issn         = {1753-1942},
  keyword      = {Eastern Europe,Economic crisis,Exit,Innovation,Micro data,Southern Europe,Survival},
  language     = {eng},
  month        = {01},
  number       = {2},
  pages        = {124--146},
  publisher    = {Inderscience Enterprises Ltd.},
  series       = {International Journal of Technological Learning, Innovation and Development},
  title        = {Surviving the times of crisis : Does innovation make a difference?},
  url          = {http://dx.doi.org/10.1504/IJTLID.2014.065881},
  volume       = {7},
  year         = {2014},
}