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A critical human group size and firm size distributions in industries

Author

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  • Christian Cordes

    (University of Bremen)

  • Tong-Yaa Su

    (University of Bremen)

  • Pontus Strimling

    (Stockholm University)

Abstract

Initially taking a theoretical stance, this paper relates firm-level processes and size distributions of firms at the industry level. An analytically tractable model explores how firm growth, exit, and spinoff activity in combination with systematically appearing growth crises in organizational development translate into specific firm size distributions (FSDs). Based on anthropological, social-psychological, and economic evidence on the effects of increasing group size on performance, the model features a critical organizational size that triggers growth crises. These processes generate size distributions of firms including different right-skewed distributions observed in the empirical literature and self-reinforcing spinoff processes that affect an industry’s FSD.

Suggested Citation

  • Christian Cordes & Tong-Yaa Su & Pontus Strimling, 2019. "A critical human group size and firm size distributions in industries," Journal of Bioeconomics, Springer, vol. 21(2), pages 123-144, July.
    • Handle: RePEc:kap:jbioec:v:21:y:2019:i:2:d:10.1007_s10818-018-09282-w
    DOI: 10.1007/s10818-018-09282-w
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