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Size, age and firm growth in the Indian manufacturing sector

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  • K. R. Shanmugam
  • Saumitra Bhaduri

Abstract

The conventional wisdom on the relationship of firm growth with its size and age is typically based on the studies in developed economies. In contrast, this study analyses the firm growth patterns for an emerging economy, namely India. It uses a balanced panel of 392 manufacturing firms over the years 1989-1990 to 1992-1993 to explore unobserved heterogeneity among firms. Results indicate that age positively influences growth, which is the opposite of the result obtained in previous studies. The current size negatively impacts growth as in earlier studies. Results also indicate that smaller and older firms grow faster than their counterparts. Size effect is larger in food industry while the age effect is larger in non-metal industry.

Suggested Citation

  • K. R. Shanmugam & Saumitra Bhaduri, 2002. "Size, age and firm growth in the Indian manufacturing sector," Applied Economics Letters, Taylor & Francis Journals, vol. 9(9), pages 607-613.
    • Handle: RePEc:taf:apeclt:v:9:y:2002:i:9:p:607-613
    DOI: 10.1080/13504850110112035
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    7. Adamos Adamou & Subash S, 2008. "The Impact of R&D and Foreign Direct Investment on Firm Growth in Emerging-Developing Countries : Evidence from Indian Manufacturing Industries," Development Economics Working Papers 22492, East Asian Bureau of Economic Research.
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    16. Alexander Coad & Jagannadha Pawan Tamvada, 2008. "The Growth and Decline of Small firms In Developing Countries," Papers on Economics and Evolution 2008-08, Philipps University Marburg, Department of Geography.
    17. Antonio Palestrini, 2015. "Firm Size Distribution and the Survival Bias," Economics Bulletin, AccessEcon, vol. 35(3), pages 1630-1637.
    18. Rajesh Raj S.N., 2011. "Technical Efficiency in the Informal Manufacturing Sector," Journal of South Asian Development, , vol. 6(2), pages 213-232, October.
    19. Ali, Jabir, 2016. "Performance of small and medium-sized food and agribusiness enterprises: evidence from Indian firms," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(4), September.
    20. B.L. Pandit, 2007. "Inter-firm differences in FII portfolio investment in India," Working Papers id:1243, eSocialSciences.
    21. LIU Yang, 2018. "Firm Age, Size, and Employment Dynamics: Evidence from Japanese firms," Discussion papers 18006, Research Institute of Economy, Trade and Industry (RIETI).
    22. Bentzen Jan & Tung Le Thanh, 2023. "Does firm size improve firm growth? Empirical evidence from an emerging economy," Economics and Business Review, Sciendo, vol. 9(3), pages 9-21, October.
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    25. Angel Sevil & Alfonso Cruz & Tomas Reyes & Roberto Vassolo, 2022. "When Being Large Is Not an Advantage: How Innovation Impacts the Sustainability of Firm Performance in Natural Resource Industries," Sustainability, MDPI, vol. 14(23), pages 1-20, December.

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