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

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Author

  • Oleg Sidorkin
  • Martin Srholec

Summary, in English

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.

Publishing year

2014-01-01

Language

English

Pages

124-146

Publication/Series

International Journal of Technological Learning, Innovation and Development

Volume

7

Issue

2

Document type

Journal article

Publisher

Inderscience Publishers

Topic

  • Economics and Business

Keywords

  • Eastern Europe
  • Economic crisis
  • Exit
  • Innovation
  • Micro data
  • Southern Europe
  • Survival

Status

Published

ISBN/ISSN/Other

  • ISSN: 1753-1942