Final version of this paper appears in K. Kourtit, P. Nijkamp, and B. Stimson (Eds.), Applied Regional Growth and Innovation Models, Springer, Heidelberg, pp. 83‐106. External effects of metropolitan innovation on firm survival: non-parametric evidence from computer and electronic product manufacturing, and healthcare Alexandra Tsvetkova, George Mason University Jean-Claude Thill, University of North Carolina - Charlotte Deborah Strumsky, University of North Carolina - Charlotte Abstract Extensive literature argues that knowledge spillovers are likely to be present in agglomerated regions with greater accumulated stock of knowledge. According to this view, firms exposed to knowledge spillovers should become more innovative and productive. Existing empirical research consistently finds a negative relationship between a firm’s own innovation and productivity, on the one hand, and the probability of exit, on the other. We test this supposition using non-parametric survival analysis. The chapter investigates the effects of metropolitan innovation on survival chances of standalone non-patenting firms in computer and electronic product manufacturing and healthcare. On average, computer and electronic product manufacturing firms tend to exit sooner in more innovative environments, while the opposite holds true for healthcare establishments. These results, however, are sensitive to a number of metropolitan characteristics.