Analyzing the Distributions of the Stochastic Firm Growth Approach
AbstractRecently there has been a renewed interest in the study of firm size distributions and firm growth rate distributions. The stochastic firm growth approach builds on the assumption that firm growth rates are independent identically distributed and size is determined by a first order autoregressive process leaving the size distribution log-normal. This paper analyzes these distributional patterns in an empirical context questioning the foundation of the stochastic growth approach. In a cross section analysis of four industries using Danish data it is shown that the foundation for and the outcome of the stochastic firm growth process as it has so far been conceived are empirically far-fetched. In particular significant deviations from normality are found with respect to third and fourth moments.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 03-12.
Date of creation: 2003
Date of revision:
Contact details of provider:
Web page: http://www.druid.dk/
Firm Growth Rate and Size Distributions; Evolution of Industries;
Find related papers by JEL classification:
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bronwyn H. Hall, 1988.
"The Relationship Between Firm Size and Firm Growth in the U.S. Manufacturing Sector,"
NBER Working Papers
1965, National Bureau of Economic Research, Inc.
- Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
- Giulio Bottazzi & Elena Cefis & Giovanni Dosi, 2002.
"Corporate growth and industrial structures: some evidence from the Italian manufacturing industry,"
Industrial and Corporate Change,
Oxford University Press, vol. 11(4), pages 705-723, August.
- Giulio Bottazzi & Elena Cefis & Giovanni Dosi, 2001. "Corporate Growth and Industrial Structure. Some Evidence from the Italian Manufacturing Industry," LEM Papers Series 2001/08, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Evans, David S., 1986.
"Tests of Alternative Theories of Firm Growth,"
86-36, C.V. Starr Center for Applied Economics, New York University.
- Bottazzi, Giulio & Dosi, Giovanni & Lippi, Marco & Pammolli, Fabio & Riccaboni, Massimo, 2001.
"Innovation and corporate growth in the evolution of the drug industry,"
International Journal of Industrial Organization,
Elsevier, vol. 19(7), pages 1161-1187, July.
- Giulio Bottazzi & Giovanni Dosi & Marco Lippi & Fabio Pammolli & Massimo Riccaboni, 2001. "Innovation and Corporate Growth in the Evolution of the Drug Industry," LEM Papers Series 2001/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Brock, W A, 1999. "Scaling in Economics: A Reader's Guide," Industrial and Corporate Change, Oxford University Press, vol. 8(3), pages 409-46, September.
- Peter E Hart & Nicholas Oulton, .
"Growth and size of firms,"
NIESR Discussion Papers
77, National Institute of Economic and Social Research.
- Giulio Bottazzi & Angelo Secchi, 2002. "On the Laplace Distribution of Firms Growth Rates," LEM Papers Series 2002/20, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Geroski, Paul A, 1999. "The Growth of Firms in Theory and in Practice," CEPR Discussion Papers 2092, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keld Laursen).
If references are entirely missing, you can add them using this form.