Going, going, gone. Exit forms and the innovative capabilities of firms |
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| Authors: | Elena Cefis Orietta Marsili |
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| Institution: | a University of Bergamo and Urban and Regional research centre Utrecht, Utrecht University, Heidelberglaan 2, 3584 CS Utrecht, The Netherlands
b Rotterdam School of Management, Erasmus University, Burg. Oudlaan 50, 3062 PA Rotterdam, The Netherlands |
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| Abstract: | Although innovation is essential to build a competitive advantage and survive in the long run, some firms choose to exit, through mergers and acquisitions (M&As), or radically change their business portfolio and identity. This paper examines how innovative capabilities influence the decision of a firm to exit, among business closure, M&A, and radical restructuring. Using an analysis of a large and rich panel of Dutch manufacturing firms, we find that product and process innovation are equally important to lower the probability to close down activities, and this effect is stronger when product and process innovations are pursed in combination. We also find that process innovation reduces the probability of exit by radical restructuring, while product innovation, when not supported by process innovation, especially increases the probability of exit by M&As. Our findings suggest that exit strategies are intimately bound to the nature and synergies of innovative efforts. |
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| Keywords: | L11 L25 D21 O32 |
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