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Going Through a Crisis: Firm Devekopment and Firm SIze Distributions

Author

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  • Christian Cordes

    (University of Bremen, Faculty of Business Studies and Economics, Hochschulring 4, 28359 Bremen, Germany)

  • Tong-Yaa Su

    (University of Bremen, Faculty of Business Studies and Economics, Hochschulring 4, 28359 Bremen, Germany)

  • Pontus Strimling

    (Maelardalen University, Department of Mathematics and Physics, Hoegskoleplan 1, Rosenhill, Vaesteas, Sweden)

Abstract

This paper relates firm-level processes and size distributions of firms at the industry level. An analytically tractable model explores how firm growth, exit, and spinoff activity in combination with systematically appearing growth crises in organizational development translate into specific steady-state firm size distributions (FSDs). Based on anthropological, social-psychological, and economic evidence on the effects of increasing group size on performance, the model features a critical organizational size that triggers these growth crises. Together, these processes generate empirically observable size distributions of firms including right-skewed and Pareto distributions as well as self-reinforcing spinoff processes that affect an industry’s FSD.v

Suggested Citation

  • Christian Cordes & Tong-Yaa Su & Pontus Strimling, 2015. "Going Through a Crisis: Firm Devekopment and Firm SIze Distributions," Papers on Economics and Evolution 2015-06, Philipps University Marburg, Department of Geography.
    • Handle: RePEc:esi:evopap:2015-06
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm Size Distribution; Firm Growth; Critical Firm Size; Industry Evolution;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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