The result of “R&D, Innovation, and Business Performance of Japanese Start-ups: A Comparison with Established Firms”

Despite the importance of innovation activities in business start-ups, few studies have comprehensively compared these undertakings to equivalent ones in established firms. Therefore, we compare the determinants of R&D intensity, innovation, and firm performance in start-ups and established firms with a three-stage model, using comparable datasets in Japan. Estimation results suggest that 1) the effects of public financial support on R&D intensity are positive but smaller for start-ups; 2) the effects of research cooperation with business partners and universities on innovation are positive and larger for start-up; and 3) the effects of product and process innovation on labor productivity (level and growth) are positive both for start-ups and established firms.