1 Introduction
2 Background and hypothesis development
2.1 Divergent exit routes
Author | Exit route | Major determinants | Sample | Method |
---|---|---|---|---|
Balcaen et al. (2012) | B, M, V | Firm (cash flow, leverage, debt, age), Industry (dummies) | 6118 firms (firms less than 5 years old excluded), 1998–2000, Belgium. | Binomial nested logit |
Buehler et al. (2006) | B, M (S) | Firm (size, age), Region (dummies), Industry (dummies) | 54,750 firms (13.6 employees), 1995–2000, Switzerland. | Continuous-time duration |
Cefis and Marsili (2011) | C, M (S) | Firm (product and process innovation, size, group affiliation, patent application, entrepreneurial-firm dummy), Industry (low or high-tech dummy) | 3203 firms (young ones within 5 years: 8%), 1996–2003, the Netherlands. | Multinomial logit |
Cefis and Marsili (2012) | C, M, R (S) | Firm (product and process innovation, age, size), Industry (Pavitt’s categories) | 3275 firms (118.2 employees, 28.7 years), 1996–2003, the Netherlands. | Multinomial logit and cloglog. |
Cotei and Farhat (2018) | M (S) | Founder (education, work experience, gender), Firm (positive employment growth, serial entrepreneur, R&D, dummy for patent, trademark or copyright), Industry (dummies) | 3140 firms (created in 2004), 2005–2011, the USA. | Multinomial logit |
Esteve-Pérez et al. (2010) | C, M (S) | Firm (size, age, labor productivity, price-cost margins, R&D, advertising), Industry (low, medium or high-tech dummy) | 2998 firms (257.5 employees, 23.9 years), 1990–2000, Spain. | Continuous-time duration |
Fontana and Nesta (2009) | C, M (S) | Firm (technology frontier, R&D intensity, size, age) | 121 firms (470–480 employees), 1990–2005, worldwide LAN switching industry. | Multinomial logit and cloglog |
Grilli et al. (2010) | C, M (S) | Firm (size, age), Industry (dummies) | 13,574 firms (1 or 2 employees, 0 to 13 years), 1983–2006, Italy. | Continuous and discrete-time duration (cloglog) |
Harhoff et al. (1998) | B, V (S) | Firm (size, ownership, diversification, legal status), Industry (dummies) | 10,902 firms (276 employees, 19 years), 1989–1994, West Germany. | Continuous-time duration |
Honjo and Kato (2019) | B, M (S) | Firm (initial debt finance (size/ratio), initial equity finance (size/ratio), dummy for minimum capital requirement regulation), Industry (dummies) | 16,185 firms (joint-stock companies, less than 100 employees), 1995–2011, Japan | Continuous-time duration |
Kato and Honjo (2015) | B, M, V (S) | Founder (educational level/field, age, gender), firm (paid-in capital, age, legal status), Region (unemployment rate), Industry (HHI, growth, capital intensity, low- vs. high-tech sector) | 7868 firms (less than 100 employees, 0 to 12 years), 1997–2004, Japan. | cloglog and random-effects cloglog |
Mata et al. (2007) | B, V (S) | Firm (size, age, debt, bank relationship, foreign ownership, worker’s wages, worker’s schooling), Industry (dummies) | 413,586 observations (14.8 years), 1995–2000, Portugal. | Multinomial logit |
Ponikvar et al. (2018) | B, M, V (S) | Firm (financial conditions, size, age, labor productivity, fixed asset ratio), region (dummies), Industry (dummies) | 55,810 firms (7.8 employees, 10.2 years), 2006–2012, Slovenia. | Multinomial probit |
Schary (1991) | B, M, V (S) | Firm (debt, cash flow, other financial characteristics) | 61 firms, 1924-1940, New England textile industry. | Ordered logit and multinomial logit |
Wagner and Cockburn (2010) | D, M (S) | Firm (age at IPO, size, total assets, patent application, patent citation), Industry (dummies) | 356 firms, (5.9 years), 1998–2005, US Internet-related industries. | Continuous-time duration |
Wennberg et al. (2010) | Harvest/distress liquidation and sale, (S) | Founder (Entrepreneurial/industry experience, education, gender, outside job, age), Firm (size, ownership by the parent firm, reinvestment), Industry (dummies) | 1735 firms (3 employees, 4.5 years), 1995–2002, Sweden. | Multinomial logit |
2.2 Patenting and exit routes
Author | Patent measure | Major finding | Sample |
---|---|---|---|
Buddelmeyer et al. (2010) | (1) Patent application (2-year lagged), (2) patent stock (aggregates of number of years in-force) | (1) Positive on exit, (2) negative on exit | 299,038 firms (all companies registered), 1997–2003, Australia |
Cefis and Marsili (2011) | Patent application (dummy) | Negative on exit via M&A, insignificant for closure | 3203 firms (young ones within 5 years: 8%), 1996–2003, the Netherlands |
Colombelli et al. (2013) | Patent application stock | Positive on survival | 74,862 manufacturing firms (firms created by 2001), 2001–2011, France |
Cotei and Farhat (2018) | IP rights (dummy for patent, trademark, or copyright) | Positive on exit via M&A | 3140 firms (created in 2004), 2005–2011, the US |
Helmers and Rogers (2010) | Patent application (dummy) | Negative on exit | 131,325 firms, (limited companies incorporated in 2001), 2001–2005, UK |
Levitas et al. (2006) | (1) Average citation ratio (# citations adjusted by the application year and patent class), (2) patent activity (dummy) | (1) Negative on exit, (2) insignificant | 295 firms (the number of employees is approximately 500), integrated circuit industry |
Wagner and Cockburn (2010) | (1) Patent application (dummy), (2) # of US patent application, (3) # patents w/more than 6 cites | (1) Negative on pooled exit, merger, and delisted, (2) negative on pooled exit and merger, insignificant on delisted, (3) positive on exit via merger | 356 firms (5.9 years), 1998–2005, US Internet-related industries |
2.3 Hypothesis development
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Hypothesis 1: New firms with a higher stock of patents are less likely to go bankrupt.
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Hypothesis 2: New firms with a higher stock of patents are more likely to exit via merger.
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Hypothesis 3: New firms with a higher stock of patents are more likely to exit voluntarily.
3 Method
3.1 Empirical model
3.2 Probability of exit routes
3.3 Patent stock
3.4 Instrumental variables
3.5 Control variables
Variable | Definition |
---|---|
(Dependent variable) | |
Bankruptcy | Dummy variable: 1 if the firm goes bankrupt between periods t and t+1, 0 if the firm survives. |
Merger | Dummy variable: 1 if the firm exits via merger between periods t and t+1, 0 if the firm survives. |
Voluntary | Dummy variable: 1 if the firm voluntarily liquidates the business between periods t and t+1, 0 if the firm survives. |
(Endogenous variable) | |
Patst | A stock of citation-weighted patents applied by the firm in period t. |
Patst_gr | A stock of citation-weighted patents granted by the patent authority among patents applied by the firm in period t. |
(Control variable) | |
Pre_pat | Dummy variable: 1 if the founder has experience of patent applications, 0 otherwise. |
Size | Logarithm of the number of employees in the first year of observation. |
Age_firm | Number of years after the foundation for the firm in period t. |
Age_founder | Founders’ age at founding. |
Edu_univ | Dummy variable: 1 if the founder had a university education before founding, 0 otherwise. |
Edu_X | Dummy variable: 1 if the educational background of the founder is unknown, 0 otherwise. |
(Instrumental variable) | |
Appro | Industry’s degree of appropriability of innovation outcomes. |
Tech | Industry’s degree of technological opportunities. |
4 Data
4.1 Data sources
4.2 Descriptive statistics
Year of entry | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||||||||||
Exit events | Exit events | Exit events | Exit events | Exit events | Exit events | Exit events | Exit events | |||||||||||||||||||||||||
Interval | N | B | M | V | N | B | M | V | N | B | M | V | N | B | M | V | N | B | M | V | N | B | M | V | N | B | M | V | N | B | M | V |
2003–2004 | 482 | 0 | 2 | 0 | ||||||||||||||||||||||||||||
2004–2005 | 480 | 3 | 3 | 1 | 490 | 0 | 0 | 1 | ||||||||||||||||||||||||
2005–2006 | 471 | 4 | 2 | 4 | 489 | 2 | 2 | 0 | 538 | 0 | 0 | 0 | ||||||||||||||||||||
2006–2007 | 458 | 3 | 6 | 8 | 485 | 5 | 4 | 4 | 537 | 5 | 0 | 2 | 866 | 0 | 0 | 1 | ||||||||||||||||
2007–2008 | 439 | 6 | 7 | 8 | 471 | 4 | 6 | 4 | 528 | 8 | 10 | 2 | 865 | 2 | 2 | 4 | 859 | 1 | 0 | 1 | ||||||||||||
2008–2009 | 412 | 9 | 5 | 7 | 453 | 8 | 5 | 4 | 503 | 7 | 5 | 8 | 854 | 5 | 5 | 8 | 857 | 4 | 5 | 3 | 937 | 0 | 0 | 0 | ||||||||
2009–2010 | 387 | 3 | 3 | 5 | 432 | 7 | 5 | 7 | 479 | 2 | 3 | 3 | 833 | 6 | 4 | 8 | 842 | 6 | 6 | 9 | 937 | 2 | 3 | 2 | 772 | 2 | 3 | 2 | ||||
2010–2011 | 373 | 4 | 3 | 2 | 413 | 3 | 2 | 1 | 468 | 10 | 3 | 2 | 808 | 7 | 9 | 9 | 816 | 6 | 3 | 12 | 925 | 4 | 5 | 7 | 765 | 2 | 0 | 8 | 326 | 0 | 1 | 7 |
2011–2012 | 360 | 2 | 0 | 3 | 404 | 6 | 3 | 2 | 451 | 4 | 4 | 2 | 777 | 9 | 5 | 2 | 790 | 7 | 5 | 5 | 901 | 3 | 3 | 4 | 747 | 8 | 5 | 9 | 315 | 0 | 3 | 9 |
2012–2013 | 355 | 5 | 4 | 0 | 392 | 2 | 1 | 1 | 441 | 2 | 5 | 1 | 753 | 7 | 4 | 5 | 767 | 4 | 4 | 7 | 885 | 4 | 3 | 7 | 715 | 9 | 4 | 5 | 297 | 5 | 3 | 13 |
Variable | Mean | Std.Dev. | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) | (13) |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(1) Bankruptcy | 0.007 | 0.083 | 1 | ||||||||||||
(2) Merger | 0.006 | 0.075 | −0.006 | 1 | |||||||||||
(3) Voluntary | 0.007 | 0.085 | −0.007 | −0.007 | 1 | ||||||||||
(4) Patst | 0.358 | 2.906 | 0.005 | −0.005 | −0.003 | 1 | |||||||||
(5) Patst_gr | 0.148 | 1.550 | −0.005 | −0.003 | −0.005 | 0.867** | 1 | ||||||||
(6) Pre_pat | 0.061 | 0.239 | −0.007 | 0.011* | 0.014** | 0.106** | 0.080** | 1 | |||||||
(7) Size | 1.792 | 1.037 | 0.018** | 0.056** | −0.007 | 0.039** | 0.023** | 0.020** | 1 | ||||||
(8) Age_firm | 3.837 | 2.237 | 0.035** | 0.023** | 0.009 | 0.073** | 0.060** | 0.007 | 0.087** | 1 | |||||
(9) Age_founder | 47.072 | 11.417 | 0.011* | 0.014** | 0.016** | 0.043** | 0.036** | 0.155** | 0.141** | −0.012** | 1 | ||||
(10) Edu | 0.414 | 0.493 | −0.002 | 0.022** | 0.008 | 0.041** | 0.030** | 0.056** | 0.044** | 0.056** | −0.044** | 1 | |||
(11) Edu_x | 0.449 | 0.497 | −0.010* | -0.009 | 0.007 | −0.032** | −0.027** | −0.029** | −0.052** | −0.051** | 0.065** | −0.760** | 1 | ||
(12) Appro | 1.306 | 0.186 | 0.001 | 0.006 | −0.001 | 0.052** | 0.039** | 0.124** | 0.027** | 0.001 | 0.134** | −0.009 | −0.013** | 1 | |
(13) Tech | 0.949 | 0.127 | −0.004 | 0.009 | 0.006 | 0.022** | 0.012** | -0.003 | −0.061** | 0.045** | −0.284** | 0.183** | −0.156** | −0.085** | 1 |
5 Results
5.1 Estimation results
Bankruptcy | Merger | Voluntary liquidation | ||||
---|---|---|---|---|---|---|
Variable | (i) Bankruptcy | (ii) Patst | (iii) Merger | (iv) Patst | (v) Voluntary | (vi) Patst |
Endogenous variable | ||||||
Patst | −0.097*** | 0.212*** | 0.121 | |||
(0.012) | (0.000) | (0.077) | ||||
Control variable | ||||||
Pre_pat | −0.063*** | 1.145*** | −0.195*** | 1.145*** | −0.009 | 1.145*** |
(0.020) | (0.253) | (0.004) | (0.253) | (0.111) | (0.252) | |
Size | 0.058 | 0.065 | 0.175*** | 0.065 | −0.020 | 0.065 |
(0.047) | (0.052) | (0.024) | (0.052) | (0.018) | (0.052) | |
Age_firm | 0.063*** | 0.078*** | 0.010* | 0.078*** | 0.025*** | 0.078*** |
(0.013) | (0.021) | (0.005) | (0.021) | (0.001) | (0.021) | |
Age_founder | 0.005 | 0.007 | 0.000 | 0.007* | 0.004 | 0.007 |
(0.003) | (0.004) | (0.000) | (0.004) | (0.004) | (0.005) | |
Edu | −0.154*** | 0.136** | 0.260*** | 0.135** | 0.314*** | 0.135** |
(0.005) | (0.065) | (0.013) | (0.065) | (0.015) | (0.064) | |
Edu_X | −0.189*** | −0.011 | 0.213*** | −0.011 | 0.317*** | −0.011 |
(0.002) | (0.150) | (0.035) | (0.150) | (0.031) | (0.150) | |
Instrumental variable | ||||||
Appro | 0.588*** | 0.576*** | 0.581*** | |||
(0.069) | (0.075) | (0.061) | ||||
Tech | 0.590*** | 0.619*** | 0.606*** | |||
(0.016) | (0.004) | (0.030) | ||||
Constant term | −2.767*** | −1.740*** | −2.500*** | −1.756*** | −2.867*** | −1.749*** |
(0.110) | (0.562) | (0.084) | (0.551) | (0.445) | (0.570) | |
Cohort dummies | Yes | Yes | Yes | Yes | Yes | Yes |
Number of observations | 31400 | 31400 | 31400 | |||
Log pseudolikelihood | −78970.765 | −78734.243 | −79020.394 | |||
Wald test of exogeneity (chi2) | 37.46*** | 10180.00*** | 1.980 |
Bankruptcy | Merger | Voluntary liquidation | ||||
---|---|---|---|---|---|---|
Variable | (i) Bankruptcy | (ii) Patst_gr | (iii) Merger | (iv) Patst_gr | (v) Voluntary | (vi) Patst_gr |
Endogenous variable | ||||||
Patst_gr | −0.248*** | 0.487*** | 0.263*** | |||
(0.084) | (0.036) | (0.058) | ||||
Control variable | ||||||
Pre_pat | −0.074 | 0.458** | −0.170** | 0.458** | 0.003 | 0.458** |
(0.051) | (0.205) | (0.084) | (0.205) | (0.056) | (0.205) | |
Size | 0.055 | 0.011 | 0.159*** | 0.012 | -0.015 | 0.011 |
(0.050) | (0.030) | (0.022) | (0.030) | (0.018) | (0.030) | |
Age_firm | 0.063*** | 0.031*** | 0.008** | 0.031*** | 0.025** | 0.031*** |
(0.013) | (0.009) | (0.004) | (0.009) | (0.012) | (0.009) | |
Age_founder | 0.005* | 0.003*** | −0.001 | 0.004*** | 0.004* | 0.004*** |
(0.003) | (0.001) | (0.001) | (0.001) | (0.002) | (0.001) | |
Edu | −0.160*** | 0.029 | 0.237*** | 0.028 | 0.312*** | 0.029 |
(0.017) | (0.031) | (0.085) | (0.032) | (0.052) | (0.031) | |
Edu_X | −0.196*** | −0.032 | 0.197*** | −0.032 | 0.313*** | −0.032 |
(0.004) | (0.084) | (0.069) | (0.084) | (0.013) | (0.084) | |
Instrumental variable | ||||||
Appro | 0.228*** | 0.220** | 0.224*** | |||
(0.076) | (0.086) | (0.078) | ||||
Tech | 0.187** | 0.210** | 0.199** | |||
(0.087) | (0.100) | (0.087) | ||||
Constant term | −2.754*** | −0.604** | 0.297** | 0.431*** | −2.186*** | −0.618** |
(0.252) | (0.249) | (0.133) | (0.119) | (0.535) | (0.251) | |
Cohort dummies | Yes | Yes | Yes | Yes | Yes | Yes |
Number of observations | 31,400 | 31,400 | 31,400 | |||
Log pseudolikelihood | −59358.017 | −59125.116 | −59409.003 | |||
Wald test of exogeneity (chi2) | 4.97** | 9.31*** | 12.33*** |