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Firm age and performance

TL;DR: In this paper, an exhaustive review of the literature and a novel collection of evidence on the effects of firm age on performance, including a special focus of interest on innovation performance, financial performance, exports, survival and growth, is presented.
Abstract: Amid increasing interest in firm age and its effects on firm performance, this special issue offers an exhaustive review of the literature and a novel collection of evidence on the effects of firm age on performance, including a special focus of interest on innovation performance, financial performance, exports, survival and growth. This editorial positions the theme in the extant literature, and provides key definitions and challenges ahead in the field of evolutionary economics. It introduces the collection of articles composing the special issue. The papers offer a diversity of country contexts, as well as analytical approaches and methods. They include an exhaustive review of the literature on age and firms' performance, and present original empirical studies focusing on the effects of age on firms' economic outcomes on the one hand, and on innovation outcomes on the other hand. While most of the papers use econometric analysis, the level of analysis ranges from firm to individual.
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TL;DR: Li et al. as discussed by the authors used hierarchical linear modeling (HLM) to investigate how green innovation influences firm performance dimensions in emerging economies, and found that green innovation has a robustly positive effect on firm performance.
Abstract: Under the background of environmental sustainability, it is of great significance to investigate how green innovation influences firm performance dimensions in emerging economies. Explicitly, the interaction effects of absorptive capacity (AC) and managerial environmental concern (MEC) on the correlation between green innovation and firm performance dimensions must be explored. Our data were obtained through a questionnaire survey from 253 companies operating in China. Using hierarchical linear modeling (HLM), we found that (1) green innovation has a robustly positive effect on firm performance dimensions (operational, financial and environmental), and (2) absorptive capacity and managerial environmental concern can positively affect the correlation between green innovation and firm performance dimensions. Our results illustrate the integrating effects of absorptive capacity, managerial environmental concern, green innovation and firm performance dimensions.

66 citations

Journal ArticleDOI
TL;DR: A comprehensive review of the literature on new venture survival can be found in this article, where the authors provide an evaluative overview of the existing literature and highlight important methodological aspects in this research field.
Abstract: This paper provides an evaluative overview of the new venture survival literature. Since Stinchcombe's primary attempt to explain the mortality rates of new ventures, different research fields, including entrepreneurship, management and sociology, have devoted considerable attention to the antecedents of new venture survival. Despite this lively research commitment, a comprehensive review of the literature on new venture survival – as one of the most essential performance measures for new ventures – is missing. Covering 54 years of research, this paper provides an overview of the factors affecting new venture survival and highlights important methodological aspects in this research field. The review concludes by discussing opportunities for future research.

49 citations

Journal ArticleDOI
TL;DR: In this paper, the authors show that environmental proactivity is able to generate competitive advantages in a firm in order to improve their economic-financial performance by introducing the role of managerial perception into the analysis.
Abstract: The main aim of this paper is to show the extent to which environmental proactivity is able to generate competitive advantages in a firm in order to improve their economic-financial performance by introducing the role of managerial perception into the analysis. This study focuses on Spanish wineries and their environmental practices and covers a total of 4598 wineries with a sample of 142 valid responses during the month of November 2015. The results can be summarized as follows. Firstly, there is positive environmental proactivity in terms of obtaining both cost-based and differentiation-based competitive advantages. Likewise, this proactivity has a positive impact on the manager’s perception of performance. Secondly, obtaining differentiation-based competitive advantages has a positive impact on the manager’s perception of performance although a negative impact on performance itself. There is, however, no significant evidence of the impact of cost-based competitive advantages on financial performance nor on the perception of performance itself, nor the impact of environmental proactivity on financial performance.

33 citations

Journal ArticleDOI
TL;DR: In this article, the effects of the innovation system of start-ups and community support and resources on business performance of startup companies using a survey of 213 start-up companies across the di...
Abstract: This study explored the effects of the innovation system of start-ups and community support and resources on business performance of start-up companies using a survey of 213 start-ups across the di...

32 citations


Cites background from "Firm age and performance"

  • ...Although the average life span of start-ups varies across the different industries and countries, the critical level between firm growth and firm death is up to 5 years.(15) Again, in Korea, according to the statistics indicators from the Ministry of small and medium-sized enterprises (SMEs) and Start-ups (MSS) in 2015, only 16....

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Journal ArticleDOI
TL;DR: In this article, the authors conducted a two-way and three-way moderation effect by extracting two generic and most researched firm-level attributes, which are firm age and size to explain the slack-performance relationship of innovative firms.

25 citations

References
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TL;DR: In this paper, the authors developed an evolutionary theory of the capabilities and behavior of business firms operating in a market environment, including both general discussion and the manipulation of specific simulation models consistent with that theory.
Abstract: This study develops an evolutionary theory of the capabilities and behavior of business firms operating in a market environment. It includes both general discussion and the manipulation of specific simulation models consistent with that theory. The analysis outlines the differences between an evolutionary theory of organizational and industrial change and a neoclassical microeconomic theory. The antecedents to the former are studies by economists like Schumpeter (1934) and Alchian (1950). It is contrasted with the orthodox theory in the following aspects: while the evolutionary theory views firms as motivated by profit, their actions are not assumed to be profit maximizing, as in orthodox theory; the evolutionary theory stresses the tendency of most profitable firms to drive other firms out of business, but, in contrast to orthodox theory, does not concentrate on the state of industry equilibrium; and evolutionary theory is related to behavioral theory: it views firms, at any given time, as having certain capabilities and decision rules, as well as engaging in various ‘search' operations, which determines their behavior; while orthodox theory views firm behavior as relying on the use of the usual calculus maximization techniques. The theory is then made operational by the use of simulation methods. These models use Markov processes and analyze selection equilibrium, responses to changing factor prices, economic growth with endogenous technical change, Schumpeterian competition, and Schumpeterian tradeoff between static Pareto-efficiency and innovation. The study's discussion of search behavior complicates the evolutionary theory. With search, the decision making process in a firm relies as much on past experience as on innovative alternatives to past behavior. This view combines Darwinian and Lamarkian views on evolution; firms are seen as both passive with regard to their environment, and actively seeking alternatives that affect their environment. The simulation techniques used to model Schumpeterian competition reveal that there are usually winners and losers in industries, and that the high productivity and profitability of winners confer advantages that make further success more likely, while decline breeds further decline. This process creates a tendency for concentration to develop even in an industry initially composed of many equal-sized firms. However, the experiments conducted reveal that the growth of concentration is not inevitable; for example, it tends to be smaller when firms focus their searches on imitating rather than innovating. At the same time, industries with rapid technological change tend to grow more concentrated than those with slower progress. The abstract model of Schumpeterian competition presented in the study also allows to see more clearly the public policy issues concerning the relationship between technical progress and market structure. The analysis addresses the pervasive question of whether industry concentration, with its associated monopoly profits and reduced social welfare, is a necessary cost if societies are to obtain the benefits of technological innovation. (AT)

22,566 citations

Journal ArticleDOI
TL;DR: In this paper, the authors consider structural inertia in organizational populations as an outcome of an ecological-evolutionary process and define structural inertia as a correspondence between a class of organizations and their environments.
Abstract: Considers structural inertia in organizational populations as an outcome of an ecological-evolutionary process. Structural inertia is considered to be a consequence of selection as opposed to a precondition. The focus of this analysis is on the timing of organizational change. Structural inertia is defined to be a correspondence between a class of organizations and their environments. Reliably producing collective action and accounting rationally for their activities are identified as important organizational competencies. This reliability and accountability are achieved when the organization has the capacity to reproduce structure with high fidelity. Organizations are composed of various hierarchical layers that vary in their ability to respond and change. Organizational goals, forms of authority, core technology, and marketing strategy are the four organizational properties used to classify organizations in the proposed theory. Older organizations are found to have more inertia than younger ones. The effect of size on inertia is more difficult to determine. The variance in inertia with respect to the complexity of organizational arrangements is also explored. (SRD)

6,425 citations

Journal ArticleDOI
TL;DR: The American Statistical Association (ASA) released a policy statement on p-values and statistical significance in 2015 as discussed by the authors, which was based on a discussion with the ASA Board of Trustees and concerned with reproducibility and replicability of scientific conclusions.
Abstract: Cobb’s concern was a long-worrisome circularity in the sociology of science based on the use of bright lines such as p< 0.05: “We teach it because it’s what we do; we do it because it’s what we teach.” This concern was brought to the attention of the ASA Board. The ASA Board was also stimulated by highly visible discussions over the last few years. For example, ScienceNews (Siegfried 2010) wrote: “It’s science’s dirtiest secret: The ‘scientific method’ of testing hypotheses by statistical analysis stands on a flimsy foundation.” A November 2013, article in Phys.org Science News Wire (2013) cited “numerous deep flaws” in null hypothesis significance testing. A ScienceNews article (Siegfried 2014) on February 7, 2014, said “statistical techniques for testing hypotheses...havemore flaws than Facebook’s privacy policies.” Aweek later, statistician and “Simply Statistics” blogger Jeff Leek responded. “The problem is not that people use P-values poorly,” Leek wrote, “it is that the vast majority of data analysis is not performed by people properly trained to perform data analysis” (Leek 2014). That same week, statistician and science writer Regina Nuzzo published an article in Nature entitled “Scientific Method: Statistical Errors” (Nuzzo 2014). That article is nowone of the most highly viewedNature articles, as reported by altmetric.com (http://www.altmetric.com/details/2115792#score). Of course, it was not simply a matter of responding to some articles in print. The statistical community has been deeply concerned about issues of reproducibility and replicability of scientific conclusions. Without getting into definitions and distinctions of these terms, we observe that much confusion and even doubt about the validity of science is arising. Such doubt can lead to radical choices, such as the one taken by the editors of Basic andApplied Social Psychology, who decided to ban p-values (null hypothesis significance testing) (Trafimow and Marks 2015). Misunderstanding or misuse of statistical inference is only one cause of the “reproducibility crisis” (Peng 2015), but to our community, it is an important one. When the ASA Board decided to take up the challenge of developing a policy statement on p-values and statistical significance, it did so recognizing this was not a lightly taken step. The ASA has not previously taken positions on specific matters of statistical practice. The closest the association has come to this is a statement on the use of value-added models (VAM) for educational assessment (Morganstein and Wasserstein 2014) and a statement on risk-limiting post-election audits (American Statistical Association 2010). However, these were truly policy-related statements. The VAM statement addressed a key educational policy issue, acknowledging the complexity of the issues involved, citing limitations of VAMs as effective performance models, and urging that they be developed and interpreted with the involvement of statisticians. The statement on election auditing was also in response to a major but specific policy issue (close elections in 2008), and said that statistically based election audits should become a routine part of election processes. By contrast, the Board envisioned that the ASA statement on p-values and statistical significance would shed light on an aspect of our field that is too often misunderstood and misused in the broader research community, and, in the process, provides the community a service. The intended audience would be researchers, practitioners, and science writers who are not primarily statisticians. Thus, this statementwould be quite different from anything previously attempted. The Board tasked Wasserstein with assembling a group of experts representing a wide variety of points of view. On behalf of the Board, he reached out to more than two dozen such people, all of whom said theywould be happy to be involved. Several expressed doubt about whether agreement could be reached, but those who did said, in effect, that if there was going to be a discussion, they wanted to be involved. Over the course of many months, group members discussed what format the statement should take, tried to more concretely visualize the audience for the statement, and began to find points of agreement. That turned out to be relatively easy to do, but it was just as easy to find points of intense disagreement. The time came for the group to sit down together to hash out these points, and so in October 2015, 20 members of the group met at the ASA Office in Alexandria, Virginia. The 2-day meeting was facilitated by Regina Nuzzo, and by the end of the meeting, a good set of points around which the statement could be built was developed. The next 3 months saw multiple drafts of the statement, reviewed by group members, by Board members (in a lengthy discussion at the November 2015 ASA Board meeting), and by members of the target audience. Finally, on January 29, 2016, the Executive Committee of the ASA approved the statement. The statement development process was lengthier and more controversial than anticipated. For example, there was considerable discussion about how best to address the issue of multiple potential comparisons (Gelman and Loken 2014). We debated at some length the issues behind the words “a p-value near 0.05 taken by itself offers only weak evidence against the null

4,361 citations

Journal ArticleDOI
TL;DR: In this article, the authors used data from the Census Bureau's Business Dynamics Statistics and Longitudinal Business Database to explore the many issues at the core of this ongoing debate and find that the relationship between firm size and employment growth is sensitive to these issues.
Abstract: The view that small businesses create the most jobs remains appealing to policymakers and small business advocates. Using data from the Census Bureau's Business Dynamics Statistics and Longitudinal Business Database, we explore the many issues at the core of this ongoing debate. We find that the relationship between firm size and employment growth is sensitive to these issues. However, our main finding is that once we control for firm age, there is no systematic relationship between firm size and growth. Our findings highlight the important role of business start-ups and young businesses in U.S. job creation.

1,430 citations

Trending Questions (3)
Is there any articles that says or implies that older firms experience higher performance flucuations?

The paper does not explicitly mention whether older firms experience higher performance fluctuations.

Is there any articles that says or implies that older firms experience higher performance fluctuations?

The paper does not explicitly mention whether older firms experience higher performance fluctuations.

Is there a difference in the performance of older companies compared to younger companies?

Yes, there is a difference in the performance of older companies compared to younger companies, as discussed in the special issue on firm age and performance.