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The Effect of the Behavioral Elements on the Growth of Iranian Firms

Author

Listed:
  • Ebrahimi , Mehrzad

    (Faculty of Economics and Management, Islamic Azad University of Shiraz,)

  • Arshadi , Ali

    (Monetary and Banking Research Institute (MBRI), Central Bank of the Islamic Republic of Iran (CBI))

Abstract

There are many factors that could have a potential impact on the growth of a firm. In this research, we examined the relationship between the following economic elements: Size of the firm, Research and development expenditure, Advertisement cost, and the growth of Iranian firms of manufacturing industry. For this purpose, four digit ISIC standard data in manufacturing industry sector have been gathered (based on the published data of the Iran Statistics Center during 1997 to 2007). Then, the effects of the size of the firm, research and development and advertisement on the firm growth were tested. Results showed that research and development and advertisement expenditure factors have positive and significant impacts on the firm growth. In contrast, there was not any significant relation between the initial size of the firm and the growth. Based on the findings of this study, the Gibrat law was confirmed. In addition, the direct relation between the behavioral elements and firm performance was verified.

Suggested Citation

  • Ebrahimi , Mehrzad & Arshadi , Ali, 2014. "The Effect of the Behavioral Elements on the Growth of Iranian Firms," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 9(4), pages 31-48, July.
    • Handle: RePEc:mbr:jmonec:v:9:y:2014:i:4:p:31-48
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Advertisement; Firm growth; Gibrat law; Research and development;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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