Innovation and firm survival: A systematic literature review and meta-analysis

Abstract

As a unique dimension of firm performance, firm survival and its relationship with innovation have a long tradition in both academics and practitioners. In the same vein, the last three decades have witnessed numerous studies investigating the fate of innovative firms. However, there is no systematic discussion on whether innovative firms are more likely to survive than their non-innovative counterparts. Therefore, this study aims to systematically review the extant literature on the impact of innovation on firm survival to answer whether innovation truly helps a firm's survival prospects. In this dissertation, the author employed four systematic review approaches to provide a comprehensive understanding of the relationship between innovation and firm survival. Firstly, the author conducted a framework-based review under four different themes: theory, context, characteristics, and methodology, to provide an answer to what is already known in the extant literature. Based on the identified gap from the review, the author outlined detailed future research directions to enrich the existing body of knowledge. Secondly, the author combined bibliometric analysis with a field-based content analysis to further analyze and visualize the extant literature. In the bibliometric analysis, citation, co-citation, and thematic analysis were performed to identify the intellectual and conceptual structure of the research area. The bibliometric mapping highlights the exchange of ideas between economics and management/organizational research, as well as the dominance of economics-oriented theories explaining the innovation and firm survival link. This pattern aligns with the findings from the framework-based review. To further examine the pattern of how ideas, theoretical perspectives, and assumptions about innovation and firm survival are transferred, adapted, or reinterpreted across domains, the author conducted field-based content analysis. The results of the content analysis indicate that diverse theoretical perspectives rooted in different domains entail distinct underlying assumptions about innovation and firm survival, leading to the proliferation of concepts and the fragmentation of the field. Finally, the author builds a theoretically grounded and testable multi-channel framework to unify the fragmented body of knowledge on innovation and firm survival research. Thirdly, the author conducted a meta-analysis on the impact of innovation on overall firm survival using data from 39 independent samples, encompassing over 950,000 firms. The results show that innovative firms have an 18% lower hazard rate than non-innovative ones, suggesting that, on average, innovation has a protective effect on overall firm survival. More specifically, innovative firms are more likely to survive in the export market and are less likely to experience negative or pooled exits. Results provide no significant effect on innovation and mergers and acquisitions (M&As). Furthermore, subgroup analysis was performed to examine how innovation's effect varies across different settings. That is, firms operating in a low-uncertainty avoidance context and operating in a high-technological environment exhibit a more substantial protective effect of innovation on firm survival. In addition, the innovation output approach is a weak but statistically significant moderator between innovation and the firm survival link. Taken together, corroborating evidence from both meta-analysis and robustness tests indicates that the impact of innovation on firm survival is highly heterogeneous and context-sensitive, depending on factors such as national culture, industry type, and innovation measurement. This provides empirical support for the multi-channel framework developed in the previous chapter, which accounts for the importance of societal norms, environmental factors, and innovation outputs for the focal link. All in all, by using methodological triangulation, this dissertation contributes to the literature by systematically analyzing the impact of innovation on firm survival research conceptually, structurally, and empirically. It is believed that this dissertation provides valid explanations of whether innovation enhances firm survival and opens a new avenue for considering interaction-based and complex models in the innovation and firm survival research area.