The Role of Innovation on Start-Up Failure vs. its Success

Abstract

It is evidenced that approximately 90% of startups businesses fail. This paper investigates key variables that affect startups performance and contribute to their survival. The impact of innovative strategies such as new products, new markets, new ideas, and patents is thoroughly analyzed. The paper uses the database of ZEW with 60.000 observations for 7 years (2007-2016). The study uses quantitative research methods. The results show that innovation is positively correlated to startups’ performance. Variables such as investment, industry, start-up size, founder’s education, and employees’ educational level have affected startups’ innovations and have contributed to improving their performance. On the other hand, there was no correlation between start-ups’ incubators and performance.