The effect of the innovative environment on exit of entrepreneurial firms

M. B. Sarkar, Raj Echambadi, Rajshree Agarwal, Bisakha Sen

Research output: Contribution to journalReview articlepeer-review

Abstract

To foster 'creative destruction, 'entrants must survive the turbulent conditions they face in their first crucial years in the industry. We investigate how the external knowledge milieu of an entrant, conceptualized as its innovative environment, causes systematic variation in survival patterns. We test our model from 3,431 firms in 33 industries over 80 years. We depict the innovative environment along two knowledge-related dimensions, namely technology regime and technology intensity. While the aligned state of the innovative environment, where product innovation exists in tandem with abundant innovation opportunities, promotes entrant survival, we find that this beneficial effect is more pronounced for small entrants due to a possible mitigation of scale disadvantages.

Original languageEnglish (US)
Pages (from-to)519-539
Number of pages21
JournalStrategic Management Journal
Volume27
Issue number6
DOIs
StatePublished - Jun 1 2006

Keywords

  • Entrepreneurship
  • Industry evolution
  • Innovation
  • Technological intensity

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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