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Understanding the implications of empirical work on corporate growth rates

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  • P. A. Geroski

    (London Business School, UK)

Abstract

This paper builds on the empirical literature on corporate growth rates - which suggests that corporate growth rates are very nearly random - and asks whether this empirical work is consistent with standard theories of the firm. We examine both static and dynamic optimizing models of firm output choice, before moving on to examine production functions modelling of corporate learning, models of R&D competition and diversification. In all cases, it seems clear that random corporate growth rates are more or less exactly what one would expect these models to predict. However, the literature on Penrose effects - dynamic managerial limitations to growth - and corporate competencies are not easy to reconcile with random corporate growth rates. Copyright © 2005 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1207
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 26 (2005)
Issue (Month): 2 ()
Pages: 129-138

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Handle: RePEc:wly:mgtdec:v:26:y:2005:i:2:p:129-138

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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References

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  1. Aghion, P. & Howitt, P., 1990. "A Model Of Growth Through Creative Destruction," DELTA Working Papers 90-12, DELTA (Ecole normale supérieure).
  2. Geroski, P. A. & Van Reenen, J. & Walters, C. F., 1997. "How persistently do firms innovate?," Research Policy, Elsevier, vol. 26(1), pages 33-48, March.
  3. Geroski, Paul A & Machin, Stephen & Walters, Christopher F, 1997. "Corporate Growth and Profitability," Journal of Industrial Economics, Wiley Blackwell, vol. 45(2), pages 171-89, June.
  4. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
  5. Slater, Martin, 1980. "The Managerial Limitation to the Growth of Firms," Economic Journal, Royal Economic Society, vol. 90(3593), pages 520-28, September.
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Cited by:
  1. Riaz, Suhaib & Glenn Rowe, W. & Beamish, Paul W., 2014. "Expatriate-deployment levels and subsidiary growth: A temporal analysis," Journal of World Business, Elsevier, vol. 49(1), pages 1-11.
  2. Marco Corsino, 2008. "Product Innovation and Growth: The Case of Integrated Circuits," ROCK Working Papers 047, Department of Computer and Management Sciences, University of Trento, Italy, revised 23 Jun 2008.
  3. Harald Oberhofer & Michael Pfaffermayr, 2013. "Firm growth in multinational corporate groups," Empirical Economics, Springer, vol. 44(3), pages 1435-1453, June.
  4. Elicia Maine & Daniel Shapiro & Aidan Vining, 2010. "The role of clustering in the growth of new technology-based firms," Small Business Economics, Springer, vol. 34(2), pages 127-146, February.
  5. Michael Pfaffermayr, 2007. "Firm Growth Under Sample Selection: Conditional σ-Convergence in Firm Size?," Review of Industrial Organization, Springer, vol. 31(4), pages 303-328, December.
  6. Oberhofer, Harald & Vincelette, Gallina A, 2013. "Determinants of job creation in eleven new EU member states : evidence from firm level data," Policy Research Working Paper Series 6533, The World Bank.
  7. Crespo Cuaresma, Jesus & Oberhofer, Harald & Vincelette, Gallina A., 2014. "Institutional Barriers and Job Creation in Central and Eastern Europe," Working Papers in Economics and Finance 2014-1, University of Salzburg.
  8. Peter Huber & Michael Pfaffermayr, 2007. "The Anatomy of the Firm Size Distribution: The Evolution of its Variance and Skewness," WIFO Working Papers 295, WIFO.
  9. Harald Oberhofer, 2010. "Firm Growth, European Industry Dynamics and Domestic Business Cycles," WIFO Working Papers 377, WIFO.
  10. Erik Stam, 2010. "Growth beyond Gibrat: firm growth processes and strategies," Small Business Economics, Springer, vol. 35(2), pages 129-135, September.
  11. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, vol. 37(4), pages 633-648, May.
  12. Almuhanad Melhim & Erik J. O'Donoghue & C. Richard Shumway, 2009. "Do the Largest Firms Grow and Diversify the Fastest? The Case of U.S. Dairies," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(2), pages 284-302, 06.
  13. García-Manjón, Juan V. & Romero-Merino, M. Elena, 2012. "Research, development, and firm growth. Empirical evidence from European top R&D spending firms," Research Policy, Elsevier, vol. 41(6), pages 1084-1092.

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