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Corporate Growth and Industrial Dynamics: Evidence from French Manufacturing

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  • Giulio Bottazzi
  • Alex Coad
  • Nadia Jacoby
  • Angelo Secchi

Abstract

We report several characteristics of industrial dynamics, including the firm size distribution, Gibrat's Law, and also the distribution of growth rates and their autocorrelation. We use a variety of econometric techniques, looking first at the aggregate and subsequently at a sectoral level. Many of our results corroborate previous findings, but there are also several surprises. For example, although previous findings on US and Italian data find that the growth rate distribution follows the Laplace density (i.e. is 'tent-shaped'), the French growth rates distribution has noticeably fatter tails. Growth rates depend negatively on size but the relationship does not seem to be linear, with larger firms possibly growing faster than medium-sized ones. It also appears that growth rate autocorrelation may vary with firm size: autocorrelation is negative for smaller firms, but the magnitude seems to decrease with size and becomes positive for larger firms.

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Bibliographic Info

Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2005/21.

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Date of creation: 11 Sep 2005
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Handle: RePEc:ssa:lemwps:2005/21

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Keywords: Industrial dynamics; Gibrat's Law; Firm Growth; Aggregation.;

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References

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  1. Giulio Bottazzi & E. Cefis & Giovanni Dosi & Angelo Secchi, 2003. "Invariances and diversities in the evolution of manufacturing industries," Working Papers 03-17, Utrecht School of Economics.
  2. Alex Coad, 2007. "Firm Growth : a Survey," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00155762, HAL.
  3. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November.
  4. 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, vol. 244(1), pages 1-24.
  5. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-81, June.
  6. Singh, Ajit & Whittington, Geoffrey, 1975. "The Size and Growth of Firms," MPRA Paper 51715, University Library of Munich, Germany.
  7. Bottazzi, Giulio & Dosi, Giovanni & Lippi, Marco & Pammolli, Fabio & Riccaboni, Massimo, 2001. "Innovation and corporate growth in the evolution of the drug industry," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1161-1187, July.
  8. Giulio Bottazzi & Angelo Secchi, 2005. "Growth and Diversification Patterns of the Worldwide Pharmaceutical Industry," Review of Industrial Organization, Springer, vol. 26(2), pages 195-216, December.
  9. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
  10. Alex Coad, 2006. "A Closer Look at Serial Growth Rate Correlation," LEM Papers Series 2006/29, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  11. Stephen Hymer & Peter Pashigian, 1962. "Firm Size and Rate of Growth," Journal of Political Economy, University of Chicago Press, vol. 70, pages 556.
  12. Giulio Bottazzi & Angelo Secchi, 2003. "Common Properties and Sectoral Specificities in the Dynamics of U.S. Manufacturing Companies," Review of Industrial Organization, Springer, vol. 23(3_4), 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. Giulio Bottazzi & Angelo Secchi, 2005. "Explaining the Distribution of Firms Growth Rates," LEM Papers Series 2005/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  15. James G. MacKinnon & Halbert White, 1983. "Some Heteroskedasticity Consistent Covariance Matrix Estimators with Improved Finite Sample Properties," Working Papers 537, Queen's University, Department of Economics.
  16. Chesher, Andrew, 1979. "Testing the Law of Proportionate Effect," Journal of Industrial Economics, Wiley Blackwell, vol. 27(4), pages 403-11, June.
  17. J. O. S. Wilson & J. M. Williams, 2000. "The size and growth of banks: evidence from four European countries," Applied Economics, Taylor & Francis Journals, vol. 32(9), pages 1101-1109.
  18. 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, vol. 8(7), pages 451-454.
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