Firm age and innovation

Research output: Contribution to conferencePaper

Abstract

We study the firm-level dynamics of technological innovation. Specifically, we examine how firm age relates to the technical quality of innovations, and if firm age has differential effects on innovation quality depending on the nature of technology. Using data on 180,500 U.S. patents of COMPUSTAT firms applied for during 1984-94, we find that firm age is significantly and negatively related to technical quality. Furthermore, we find that this negative effect is significantly greater in areas with high levels of technological activity. The results remain robust to variations in samples and specification methods, and hold both in firm-level and patent-level analyses. Finally, the economic implication of this age effect appears to be substantial. One year of firm aging reduces the positive impact of a 10% increase in R&D intensity on the firm's market value by more than 3%.

Original languageEnglish (US)
StatePublished - Dec 1 2007
Externally publishedYes
Event67th Annual Meeting of the Academy of Management, AOM 2007 - Philadelphia, PA, United States
Duration: Aug 3 2007Aug 8 2007

Other

Other67th Annual Meeting of the Academy of Management, AOM 2007
CountryUnited States
CityPhiladelphia, PA
Period8/3/078/8/07

Keywords

  • Inertia
  • Innovation
  • Learning

ASJC Scopus subject areas

  • Management Information Systems
  • Management of Technology and Innovation

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  • Cite this

    Balasubramanian, N., & Lee, J. (2007). Firm age and innovation. Paper presented at 67th Annual Meeting of the Academy of Management, AOM 2007, Philadelphia, PA, United States.