Firm Age and Innovation
50 Pages Posted: 11 Dec 2008
Date Written: October 24, 2007
We examine how firm age relates to innovation quality, and how this relationship varies depending on the nature of technology. Using data on patents of COMPUSTAT firms, we find that firm age is negatively related to technical quality, and that this effect is greater in technologically active areas. The economic implication of this effect is substantial; each additional year reduces the impact of a 10% increase in R&D intensity on the firm's market value by more than 3%.
Keywords: firm age, innovation, technical quality, market value, patent
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