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Corporate Growth Convergence in Europe

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Author Info
Geroski, Paul A
Gugler, Klaus Peter

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Abstract

It is widely believed that the implementation of the Single Market Programme in 1992 has had an impact on national markets in Europe, and some people have argued that it has induced a convergence in industrial structures across countries. Using a newly available database, however, covering nearly every firm above 100 employees in 14 European countries over the time period 1994 to 1998, we do not find strong evidence for ‘convergence’ in manufacturing in Europe. ‘Full’ convergence in corporate sizes within industries is unambiguously rejected by the data, although there may be some industries where some form of conditional convergence is observed. A Gibrat process best describes the growth of very large and mature firms; but smaller and younger firms depart from this prediction. While we can identify significant correlates of growth such as firm size, age or the internal organization of the firm, most of the variation in corporate growth remains unpredictable.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2838.

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Date of creation: Jun 2001
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Handle: RePEc:cpr:ceprdp:2838

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Related research
Keywords: Convergence; Corporate Growth; Europe; Gibrat's Law;

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Find related papers by JEL classification:
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

References listed on IDEAS
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.:

  1. Geroski, Paul A & Samiei, Hossein & Urga, Giovanni, 1997. "Are Differences in Firm Size Transitory or Permanent?," CEPR Discussion Papers 1691, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Wernerfelt, Birger & Montgomery, Cynthia A, 1988. "Tobin's q and the Importance of Focus in Firm Performance," American Economic Review, American Economic Association, vol. 78(1), pages 246-50, March. [Downloadable!] (restricted)
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  4. Liu, Jin-Tan & Tsou, Meng-Wen & Hammitt, James K., 1999. "Do small plants grow faster? Evidence from the Taiwan electronics industry," Economics Letters, Elsevier, vol. 65(1), pages 121-129, October. [Downloadable!] (restricted)
  5. Mueller, Dennis C, 1972. "A Life Cycle Theory of the Firm," Journal of Industrial Economics, Blackwell Publishing, vol. 20(3), pages 199-219, July. [Downloadable!] (restricted)
  6. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-38, December. [Downloadable!] (restricted)
  7. Variyam, Jayachandran N. & Kraybill, David S., 1992. "Empirical evidence on determinants of firm growth," Economics Letters, Elsevier, vol. 38(1), pages 31-36, January. [Downloadable!] (restricted)
  8. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March. [Downloadable!] (restricted)
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  11. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Blackwell Publishing, vol. 35(4), pages 567-81, June. [Downloadable!] (restricted)
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  12. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November. [Downloadable!] (restricted)
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  13. P. Hart, 2000. "Theories of Firms' Growth and the Generation of Jobs," Review of Industrial Organization, Springer, vol. 17(3), pages 229-248, November. [Downloadable!] (restricted)
  14. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Blackwell Publishing, vol. 35(4), pages 583-606, June. [Downloadable!] (restricted)
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  15. Chandler, Alfred Jr., 1992. "What is a firm? : A historical perspective," European Economic Review, Elsevier, vol. 36(2-3), pages 483-492, April. [Downloadable!] (restricted)
  16. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-51, June. [Downloadable!] (restricted)
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  17. Geroski, Paul A & Machin, Stephen & Walters, Christopher F, 1997. "Corporate Growth and Profitability," Journal of Industrial Economics, Blackwell Publishing, vol. 45(2), pages 171-89, June. [Downloadable!] (restricted)
  18. Hart, Peter E & Oulton, Nicholas, 1996. "Growth and Size of Firms," Economic Journal, Royal Economic Society, vol. 106(438), pages 1242-52, September. [Downloadable!] (restricted)
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  19. Ijiri, Yuji & Simon, Herbert A, 1974. "Interpretations of Departures from the Pareto Curve Firm-Size Distributions," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 315-31, Part I, M. [Downloadable!] (restricted)
  20. Das, Sanghamitra, 1995. "Size, age and firm growth in an infant industry: The computer hardware industry in India," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 111-126, March. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Alex Coad & Rekha Rao & Federico Tamagni, 2008. "Growth Processes of Italian Manufacturing Firms," LEM Papers Series 2008/20, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
    Other versions:
  2. Harald Oberhofer & Michael Pfaffermayr, . "Firm Growth in Multinational Corporate Groups," Working Papers 2008-10, Faculty of Economics and Statistics, University of Innsbruck. [Downloadable!]
  3. Alexander Coad & Jagannadha Pawan Tamvada, 2008. "The Growth and Decline of Small firms In Developing Countries," Papers on Economics and Evolution 2008-08, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
  4. Harabi, Najib, 2003. "Déterminants de la croissance des entreprises: Une analyse empirique du Maroc
    [Determinants of Firm Growth: An Empirical Analysis from Morocco]    ," MPRA Paper 4440, University Library of Munich, Germany. [Downloadable!]
  5. Harald Oberhofer, 2009. "Firm growth, European industry dynamics and domestic business cycles," Working Papers 2009-18, Faculty of Economics and Statistics, University of Innsbruck. [Downloadable!]
  6. Harabi, Najib, 2005. "Determinants of Firm Growth: An Empirical Analysis from Morocco," MPRA Paper 4394, University Library of Munich, Germany. [Downloadable!]
  7. Gerrit de Wit & Haibo Zhou, 2009. "Determinants and dimensions of firm growth," Scales Research Reports H200903, EIM Business and Policy Research. [Downloadable!]
  8. Alex Coad, 2008. "Firm growth and scaling of growth rate variance in multiplant firms," Economics Bulletin, Economics Bulletin, vol. 12(9), pages 1-15. [Downloadable!]
    Other versions:
  9. Hans-Friedrich Eckey & Matthias Türck, 2006. "Convergence of EU-Regions. A Literature Report," Discussion Papers in Economics 80/06, University of Kassel, Institute of Economics. [Downloadable!]
  10. A. Arrighetti & A. Ninni, 2009. "Firm size and growth opportunities: a survey," Economics Department Working Papers 2009-EP05, Department of Economics, Parma University (Italy). [Downloadable!]
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