On Firm Growth in Networks
AbstractThis paper is explorative in nature. Based on an empirical analysis of two different industrial settings (life sciences, LS; information and communication technologies, ICT), it investigates network growth and firm growth in networks. We find a remarkable correspondence between a few fundamental findings of the ‘old’ stochastic approach to the analysis of firm internal growth, and empirically observed patterns of firm external growth through collaborative agreements. We show that scale-free behavior in real-world industrial networks can be accounted for by a general and parsimonious model, originally developed by Herbert Simon in 1955, based on entry and proportional growth. However, relevant departures from the stochastic benchmark are revealed that cannot be ascribed to the effect of mergers and acquisitions (M&As) and growth autocorrelation. Moreover, different regimes of growth are found to be at work in the life sciences for originators versus developers of new business opportunities, reflecting the fact that growth is driven by specialization and division of labor in the processes of generation and attraction/development of technological opportunities.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 15964.
Date of creation: 04 Oct 2001
Date of revision: 12 Nov 2001
Publication status: Published in Research Policy 8-9.31(2002): pp. 1405-1416
Firm growth; Network growth; Biotechnology; Information and communication technologies;
Other versions of this item:
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
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