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Common Properties and Sectoral Specificities in the Dynamics of U.S. Manufacturing Companies

  • Giulio Bottazzi
  • Angelo Secchi

The size distribution and growth rate dynamics of U.S. companies have been extensively studied by many authors. In this paper, using the COMPUSTAT database, we extend the analysis to disaggregated data, studying 15 sectors of the U.S. manufacturing industry. The sectoral investigation reveals the presence of general statistical properties that can be considered valid across all the studied sectors. In particular, the probability density of firms growth rates invariably displays a characteristic tent shape and the relation between the size of a firm and the variance of its rates of growth is characterized, in different sectors, by very similar scaling relations. The presence of characteristics that are robust and sectoral invariant hints at the existence of generic statistical properties shaping the dynamic of firms across the whole industry.

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Article provided by Springer & The Industrial Organization Society in its journal Review of Industrial Organization.

Volume (Year): 23 (2003)
Issue (Month): 3_4 (December)
Pages: 217-232

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Handle: RePEc:kap:revind:v:23:y:2003:i:3_4:p:217-232
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  1. Stephen Hymer & Peter Pashigian, 1962. "Firm Size and Rate of Growth," Journal of Political Economy, University of Chicago Press, vol. 70, pages 556.
  2. Giulio Bottazzi, 2001. "Firm Diversification and the Law of Proportionate Effect," LEM Papers Series 2001/01, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  3. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1989. "The Growth and Failure of U. S. Manufacturing Plants," The Quarterly Journal of Economics, Oxford University Press, vol. 104(4), pages 671-698.
  4. 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.
  5. Giulio Bottazzi & Elena Cefis & Giovanni Dosi, 2001. "Corporate Growth and Industrial Structure. Some Evidence from the Italian Manufacturing Industry," LEM Papers Series 2001/08, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  6. 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.
  7. Stanley, Michael H. R. & Buldyrev, Sergey V. & Havlin, Shlomo & Mantegna, Rosario N. & Salinger, Michael A. & Eugene Stanley, H., 1995. "Zipf plots and the size distribution of firms," Economics Letters, Elsevier, vol. 49(4), pages 453-457, October.
  8. 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.
  9. Bottazzi, Giulio & Secchi, Angelo, 2003. "Why are distributions of firm growth rates tent-shaped?," Economics Letters, Elsevier, vol. 80(3), pages 415-420, September.
  10. Bottazzi, Giulio & Secchi, Angelo, 2003. "A stochastic model of firm growth," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 213-219.
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