Int. J. of Technological Learning, Innovation and Development   »   2014 Vol.7, No.2

 

 

Title: Surviving the times of crisis: does innovation make a difference?

 

Authors: Oleg Sidorkin; Martin Srholec

 

Addresses:
Center for Economic Research and Graduate Education-Economics Institute (CERGE-EI), Academy of Sciences of the Czech Republic, P.O. Box 882, Politických vězňů 7, Prague 1, 111 21, Czech Republic
Center for Economic Research and Graduate Education-Economics Institute (CERGE-EI), Academy of Sciences of the Czech Republic, P.O. Box 882, Politických vězňů 7, Prague 1, 111 21, Czech Republic

 

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 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.

 

Keywords: innovation; firm survival; exit; micro data; economic crisis; Eastern Europe; Southern Europe; emerging economies; econometrics; public policy; recession; financial crisis.

 

DOI: 10.1504/IJTLID.2014.065881

 

Int. J. of Technological Learning, Innovation and Development, 2014 Vol.7, No.2, pp.124 - 146

 

Submission date: 11 Aug 2014
Date of acceptance: 14 Aug 2014
Available online: 27 Nov 2014

 

 

Editors Full text accessAccess for SubscribersPurchase this articleComment on this article