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Corporate growth and industrial dynamics: evidence from french manufacturing

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  • Giulio Bottazzi

    ()
    (LEM - Laboratory of Economics and Management - Scuola Superiore Sant'Anna)

  • Alex Coad

    ()
    (Max Planck Institute of Economics - Evolutionary Economics Group, MATISSE - Modélisation Appliquée, Trajectoires Institutionnelles et Stratégies Socio-Économiques - CNRS : UMR8595 - Université Paris I - Panthéon-Sorbonne)

  • Nadia Jacoby

    ()
    (MATISSE - Modélisation Appliquée, Trajectoires Institutionnelles et Stratégies Socio-Économiques - CNRS : UMR8595 - Université Paris I - Panthéon-Sorbonne)

  • Angelo Secchi

    (LEM - Laboratory of Economics and Management - Scuola Superiore Sant'Anna)

Abstract

This work explores basic properties of the size and growth rates distributions of firms at the aggregate and disaggregate levels. Using an extensive dataset on French manufacturing firms, we investigate which properties of firm size distributions and growth dynamics characterize the aggregate dynamics and are, at the same time, robust under disaggregation. Our analysis is based on non-linear robust regression methods which have never been applied before to this kind of data. The growth rates distributions we observe are well described by a Subbotin distribution with a shape parameter significantly lower than 1, suggesting a noticeable departure from the Laplace behavior reported in previous works on Italian and US data. At the same time, the variance of growth rates depends negatively on size and the relationship does not seem to be linear, with larger firms possibly displaying lower variability in their growth dynamics. At the disaggregate level, we observe significant heterogeneity in the firm size distributions across sectors while the shape of the sectoral growth rates density displays a surprising degree of homogeneity.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00261616.

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Date of creation: 2005
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Handle: RePEc:hal:cesptp:hal-00261616

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  1. Evans, David S., 1986. "The Relationship Between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Working Papers, C.V. Starr Center for Applied Economics, New York University 86-33, C.V. Starr Center for Applied Economics, New York University.
  2. Giulio Bottazzi & Angelo Secchi, 2006. "Explaining the distribution of firm growth rates," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 37(2), pages 235-256, 06.
  3. Alexander Coad, 2007. "Firm Growth: A Survey," Papers on Economics and Evolution 2007-03, Philipps University Marburg, Department of Geography.
  4. James G. MacKinnon & Halbert White, 1983. "Some Heteroskedasticity Consistent Covariance Matrix Estimators with Improved Finite Sample Properties," Working Papers, Queen's University, Department of Economics 537, Queen's University, Department of Economics.
  5. Nunes Amaral, Luís A & Buldyrev, Sergey V & Havlin, Shlomo & Maass, Philipp & Salinger, Michael A & Eugene Stanley, H & Stanley, Michael H.R, 1997. "Scaling behavior in economics: The problem of quantifying company growth," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 244(1), pages 1-24.
  6. Francesca Lotti & Enrico Santarelli & Marco Vivarelli, 2001. "The relationship between size and growth: the case of Italian newborn firms," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 8(7), pages 451-454.
  7. Bronwyn H. Hall, 1986. "The Relationship Between Firm Size and Firm Growth in the U.S. Manufacturing Sector," NBER Working Papers 1965, National Bureau of Economic Research, Inc.
  8. Giulio Bottazzi & E. Cefis & Giovanni Dosi & Angelo Secchi, 2003. "Invariances and diversities in the evolution of manufacturing industries," Working Papers, Utrecht School of Economics 03-17, Utrecht School of Economics.
  9. Giulio Bottazzi & Giovanni Dosi & Marco Lippi & Fabio Pammolli & Massimo Riccaboni, 2001. "Innovation and Corporate Growth in the Evolution of the Drug Industry," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2001/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  10. Alex Coad, 2007. "A Closer Look at Serial Growth Rate Correlation," Review of Industrial Organization, Springer, Springer, vol. 31(1), pages 69-82, August.
  11. Giulio Bottazzi & Angelo Secchi, 2005. "Growth and Diversification Patterns of the Worldwide Pharmaceutical Industry," Review of Industrial Organization, Springer, Springer, vol. 26(2), pages 195-216, December.
  12. Giulio Bottazzi & Angelo Secchi, 2003. "Common Properties and Sectoral Specificities in the Dynamics of U.S. Manufacturing Companies," Review of Industrial Organization, Springer, Springer, vol. 23(3), pages 217-232, December.
  13. Prais, Sigmund J, 1974. "A New Look at the Growth of Industrial Concentration," Oxford Economic Papers, Oxford University Press, vol. 26(2), pages 273-88, July.
  14. J. O. S. Wilson & J. M. Williams, 2000. "The size and growth of banks: evidence from four European countries," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 32(9), pages 1101-1109.
  15. Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "The Growth And Failure Of U.S. Manufacturing Plants," Papers, Pennsylvania State - Department of Economics 1-87-5, Pennsylvania State - Department of Economics.
  16. Singh, Ajit & Whittington, Geoffrey, 1975. "The Size and Growth of Firms," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 42(1), pages 15-26, January.
  17. Stephen Hymer & Peter Pashigian, 1962. "Firm Size and Rate of Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 70, pages 556.
  18. Chesher, Andrew, 1979. "Testing the Law of Proportionate Effect," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 27(4), pages 403-11, June.
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