The effect of the innovative environment on exit of entrepreneurial firms
Article first published online: 18 APR 2006
Copyright © 2006 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 27, Issue 6, pages 519–539, June 2006
How to Cite
Sarkar, M. B., Echambadi, R., Agarwal, R. and Sen, B. (2006), The effect of the innovative environment on exit of entrepreneurial firms. Strat. Mgmt. J., 27: 519–539. doi: 10.1002/smj.534
- Issue published online: 18 APR 2006
- Article first published online: 18 APR 2006
- Manuscript Revised: 7 NOV 2005
- Manuscript Received: 25 MAR 2003
- technological intensity;
- industry evolution;
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. Copyright © 2006 John Wiley & Sons, Ltd.