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On Firm Growth in Networks

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  • Riccaboni, Massimo
  • Pammolli, Fabio

Abstract

This 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 Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 15964.

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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
Handle: RePEc:pra:mprapa:15964

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Keywords: Firm growth; Network growth; Biotechnology; Information and communication technologies;

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References

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  1. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
  2. Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 82(327), pages 883-96, September.
  3. Orsenigo, L. & Pammolli, F. & Riccaboni, Massimo, 2001. "Technological change and network dynamics: Lessons from the pharmaceutical industry," Research Policy, Elsevier, Elsevier, vol. 30(3), pages 485-508, March.
  4. Brock, W A, 1999. "Scaling in Economics: A Reader's Guide," Industrial and Corporate Change, Oxford University Press, vol. 8(3), pages 409-46, September.
  5. Freeman, C., 1991. "Networks of innovators: A synthesis of research issues," Research Policy, Elsevier, Elsevier, vol. 20(5), pages 499-514, October.
  6. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 5(3-4), pages 287-320.
  7. Pammolli, Fabio & Riccaboni, Massimo, 2002. " Technological Regimes and the Growth of Networks: An Empirical Analysis," Small Business Economics, Springer, Springer, vol. 19(3), pages 205-15, November.
  8. Arora, Ashish & Gambardella, Alfonso, 1994. "The changing technology of technological change: general and abstract knowledge and the division of innovative labour," Research Policy, Elsevier, Elsevier, vol. 23(5), pages 523-532, September.
  9. Zucker, Lynne G & Darby, Michael R & Brewer, Marilynn B, 1998. "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review, American Economic Association, American Economic Association, vol. 88(1), pages 290-306, March.
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Citations

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Cited by:
  1. Michael D. König & Xiaodong Liu & Yves Zenou, 2014. "R&D networks: theory, empirics and policy implications," ECON - Working Papers, Department of Economics - University of Zurich 142, Department of Economics - University of Zurich.
  2. Marco S. Giarratana, 2003. "The Birth of a New Industry: Entry by Start-ups and the Drivers of Firm Growth. The Case of Encryption Software," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2003/28, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  3. Cowan,Robin & Jonard,Nicolas & Zimmermann,J-B, 2004. "Networks as Emergent Structures from Bilateral Collaboration," Research Memorandum, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT) 017, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  4. Wegberg,Marc,van, 2003. "A note on network structure: functional relationships between network indicators," Research Memorandum 049, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  5. Schilirò, Daniele, 2008. "Knowledge, learning, networks and performance of firms in knowledge-based economies," MPRA Paper 30901, University Library of Munich, Germany.
  6. repec:spo:wpecon:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS
  7. Mauro V. Tomasello & Mauro Napoletano & Antonios Garas & Frank Schweitzer, 2013. "The Rise and Fall of R&D Networks," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2013/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  8. M. Koenig & Claudio J. Tessone & Yves Zenou, . "A Dynamic Model of Network Formation with Strategic Interactions," Working Papers, ETH Zurich, Chair of Systems Design CCSS-09-006, ETH Zurich, Chair of Systems Design.
  9. Michael Koenig, 2012. "The Formation of Networks with Local Spillovers and Limited Observability," Discussion Papers, Stanford Institute for Economic Policy Research 11-004, Stanford Institute for Economic Policy Research.
  10. Giunta, Anna & Nifo, Annamaria & Scalera, Domenico, 2009. "Subcontracting in the Italian industry. Labour Division, Firms’ Growth and North-South Divide," MPRA Paper 13084, University Library of Munich, Germany.
  11. Anna Giunta & Domenico Scalera & Annamaria Nifo, 2008. "Divisione del lavoro, crescita e divari di performance nell'industria italiana degli anni '90," Departmental Working Papers of Economics - University 'Roma Tre' 0097, Department of Economics - University Roma Tre.
  12. Cowan,Robin, 2004. "Network models of innovation and knowledge diffusion," Research Memorandum, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT) 016, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).

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