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Gibrat's Law: are the services different?

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Author Info
Audretsch, D.B.
Klomp, L.
Thurik, A.R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)

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Abstract

Several noted surveys on intra-industry dynamics have recently reached the conclusion from a large body of evidence that Gibrat's Law does not hold. However, almost all of these studies have been based on manufacturing. There are compelling reasons to doubt whether these findings hold for the services. In this paper we examine whether the basic tenet underlying Gibrat's Law - that growth rates are independent of firm size - can be rejected for the services as it has been for manufacturing. Based on a large sample of Dutch firms the evidence suggests that growth rates are, in fact, independent of firm size. Validation of Gibrat's Law in the services suggests that the dynamics of industrial organisation for services may not simply mirror that for manufacturing.

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Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2002-04-STR Revision_Date: 2009-11-09.

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Date of creation: 22 Jan 2002
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Handle: RePEc:dgr:eureri:2002150

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Keywords: firm growth; service industries; Gibrat's Law;

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Cited by:
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  1. Rui Baptista & Paulo Madruga & Vitor Escaria, . "Entrepreneurship, Regional Development and Job Creation: the Case of Portugal," Papers on Entrepreneurship, Growth and Public Policy 2005-06, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
  2. Gerrit de Wit & Haibo Zhou, 2009. "Determinants and dimensions of firm growth," Scales Research Reports H200903, EIM Business and Policy Research. [Downloadable!]
  3. Blandina Oliveira & Adelino Fortunato, 2003. "Testing Gibrat’s Law: Empirical Evidence from a Panel of Portuguese Manufacturing Firms," GEMF Working Papers 2003-07, GEMF - Faculdade de Economia, Universidade de Coimbra. [Downloadable!]
  4. Harald Oberhofer & Michael Pfaffermayr, . "Firm Growth in Multinational Corporate Groups," Working Papers 2008-10, Faculty of Economics and Statistics, University of Innsbruck. [Downloadable!]
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  6. Rui Baptista & Vítor Escária & Paulo Madruga, 2008. "Entrepreneurship, regional development and job creation: the case of Portugal," Small Business Economics, Springer, vol. 30(1), pages 49-58, January. [Downloadable!] (restricted)
  7. Bhattacharyya, Surajit & Saxena, Arunima, 2009. "Does the Firm Size Matter? An Empirical Enquiry into the Performance of Indian Manufacturing Firms," MPRA Paper 13029, University Library of Munich, Germany. [Downloadable!]
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  10. Blandina Oliveira & Adelino Fortunato, 2008. "The dynamics of the growth of firms: evidence from the services sector," Empirica, Springer, vol. 35(3), pages 293-312, July. [Downloadable!] (restricted)
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  11. Christopher A Laincz & Ana Sofia Domingues Rodrigues, . "A Theoretical Foundation for Understanding Firm Size Distributions and Gibrat's Law," Discussion Papers 05/34, Department of Economics, University of York. [Downloadable!]
  12. Henrekson, Magnus & Johansson, Dan, 2008. "Gazelles as Job Creators – A Survey and Interpretation of the Evidence," Working Paper Series 733, Research Institute of Industrial Economics. [Downloadable!]
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  13. Rui Baptista & Roy Thurik, 2004. "The Relationship between Entrepreneurship and Unemployment: is Portugal an Outlier?," Papers on Entrepreneurship, Growth and Public Policy 2004-40, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
  14. Ana Sofia Domingues Rodrigues & Christopher A. Laincz, 2004. "Understanding the Variations in Gibrat's Law with a Markov-Perfect Dynamic Industry Model," Computing in Economics and Finance 2004 173, Society for Computational Economics. [Downloadable!]
  15. R. Piergiovanni & E. Santarelli & L. Klomp & A.R. Thurik, 2002. "Gibrat's Law and the Firm Size / Firm Growth Relationship in Italian Services," Tinbergen Institute Discussion Papers 02-080/3, Tinbergen Institute. [Downloadable!]
  16. Renata Kosova & Francine Lafontaine, 2006. "Firm Survival and Growth in Retail and Service Industries: Evidence from Franchised Chains," Working Papers 0007, School of Business, The George Washington University. [Downloadable!]
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  18. Bentzen, Jan & Madsen, Erik Strøjer & Smith, Valdemar, 2006. "The Growth Opportunities for SMEs?," Working Papers 06-3, University of Aarhus, Aarhus School of Business, Department of Economics. [Downloadable!]
  19. Avenel, E. & Corolleur, F. & Gauthier, C. & Rieu, C., 2005. "Start-ups, firm growth and the consolidation of the French biotech industry," Working Papers 200503, Grenoble Applied Economics Laboratory (GAEL). [Downloadable!]
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