Inter-firm rivalry and firm growth: Is there any evidence of direct competition between firms?
AbstractInter-firm competition has received much attention in the theoretical literature, but recent empirical work suggests that the growth rates of rival firms are uncorrelated, and that firm growth can be taken as an essentially independent process. We begin by investigating the correlations of the growth rates of competing firms (i.e. the largest and second-largest firms in the same industry) and observe that, surprisingly, the growth of these firms can be taken as independent. Nevertheless, peer-effect regressions, that take into account the simultaneous interdependence of growth rates of rival firms, are able to identify significant negative effects of rivals' growth on a firm's growth.
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Bibliographic InfoPaper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2010-18.
Date of creation: Dec 2010
Date of revision:
Other versions of this item:
- Alex Coad & Mercedes Teruel, 2013. "Inter-firm rivalry and firm growth: is there any evidence of direct competition between firms?," Industrial and Corporate Change, Oxford University Press, vol. 22(2), pages 397-425, April.
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-03 (All new papers)
- NEP-BEC-2011-01-03 (Business Economics)
- NEP-COM-2011-01-03 (Industrial Competition)
- NEP-CSE-2011-01-03 (Economics of Strategic Management)
- NEP-ENT-2011-01-03 (Entrepreneurship)
- NEP-MIC-2011-01-03 (Microeconomics)
- NEP-SBM-2011-01-03 (Small Business Management)
- NEP-TID-2011-01-03 (Technology & Industrial Dynamics)
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