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Gibrat's Law and peer group effect: the case of Tunisian small manufacturing companies

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  • Amara Mohamed

    () (Higher Institute of Management of Sousse, University of Sousse)

Abstract

To extend the empirical research on Gibrat's law in developing countries, this article uses a linear-in-means model to test how inter-firm interactions can affect the growth of small manufacturing firms in Tunisia. More specifically, we distinguish between the effects of own firm's characteristics and mean characteristics of their neighbors on its growth. Using 1389 small manufacturing firms, we show that Gibrat's law is not confirmed. In addition, the results show that the average growth rate of neighboring firms located in the same governorate and belonging to the same sector affect significantly individual firm's growth.

Suggested Citation

  • Amara Mohamed, 2014. "Gibrat's Law and peer group effect: the case of Tunisian small manufacturing companies," Economics Bulletin, AccessEcon, vol. 34(1), pages 373-384.
  • Handle: RePEc:ebl:ecbull:eb-13-00554
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    Keywords

    Gibrat's Law; Peer effects; Firm's growth; Small firms; Tunisia;

    JEL classification:

    • D0 - Microeconomics - - General
    • L0 - Industrial Organization - - General

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