R. Piergiovanni (Statistics Italy, Rome) E. Santarelli (University of Bologna) L. Klomp (Ministry of Economic Affairs, The Hague) A.R. Thurik () (CASBEC, Erasmus University Rotterdam, and EIM Business and Policy Research, Zoetermeer)
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Several surveys on intra-industry dynamics have recently reached the conclusion from a large body of evidence that Gibrat's Law does not hold, i.e., the main finding is that firm growth decreases with firm size. However, almost all of these studies have been based on manufacturing. In this paper - in search of further evidence supporting the results recently obtained for a large sample of Dutch firms in the hospitality industry - we examine whether the assumption that growth rates are independent of firm size can be rejected for the services, as it has been for manufacturing, also in the case of Italy. Based on a large sample of Italian new-born firms in five business groups in the hospitality industry, the evidence suggests that growth rates are, in fact, independent of firm size in two business groups, while Gibrat's Law is rejected for the remaining three business groups and for the industry as a whole. These mixed results concerning Gibrat's Law in the services are consistent with the hypothesis that the dynamics of industrial organisation for services may not simply mirror that for manufacturing. Besides, the findings in this paper support the hypothesis that any general conclusion concerning Gibrat's Law cannot be reached without considering heterogeneity, at least among firms of different industries.
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Audretsch, D.B. & Klomp, L. & Thurik, A.R., 2002.
"Gibrat's Law: are the services different?,"
Research Paper
ERS-2002-04-STR Revision_, 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 Uni.
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