Technological regimes and firm survival

Abstract

This paper investigates whether the type of technological regime moderates the effects of entry timing, entry size (i.e., initial resources), and active (post-entry) learning on firm survival. By analyzing a unique dataset of newly founded Korean manufacturing firms, we find that the effects of the factors influencing firm survival differ substantially across technological regimes. Specifically, entry size has the greatest positive effect on firm survival under the regime characterized by low technological opportunity and high R&D appropriability, under which opportunities for disruptive innovation are stagnant and the advantages of initial resources are more likely to persist. Post-entry active learning through R&D, on the contrary, has the greatest effect on firm survival under the regime of high technological opportunity and low R&D appropriability, under which active learning through contemporaneous R&D effort is more crucial for firm survival than initial resource advantages mostly due to the possibility of creative destruction.