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Size, age and firm growth in the Indian manufacturing sector

Author

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  • K. R. Shanmugam
  • Saumitra Bhaduri

Abstract

The conventional wisdom on the relationship of firm growth with its size and age is typically based on the studies in developed economies. In contrast, this study analyses the firm growth patterns for an emerging economy, namely India. It uses a balanced panel of 392 manufacturing firms over the years 1989-1990 to 1992-1993 to explore unobserved heterogeneity among firms. Results indicate that age positively influences growth, which is the opposite of the result obtained in previous studies. The current size negatively impacts growth as in earlier studies. Results also indicate that smaller and older firms grow faster than their counterparts. Size effect is larger in food industry while the age effect is larger in non-metal industry.

Suggested Citation

  • K. R. Shanmugam & Saumitra Bhaduri, 2002. "Size, age and firm growth in the Indian manufacturing sector," Applied Economics Letters, Taylor & Francis Journals, vol. 9(9), pages 607-613.
  • Handle: RePEc:taf:apeclt:v:9:y:2002:i:9:p:607-613
    DOI: 10.1080/13504850110112035
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    Citations

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    Cited by:

    1. Saumitra, Bhaduri & Amit, Kumar, 2012. "Allocation of capital in the post liberalized regime: a case study of the Indian corporate sector," MPRA Paper 37999, University Library of Munich, Germany.
    2. Adamos Adamou & Subash S, 2008. "The Impact of R&D and Foreign Direct Investment on Firm Growth in Emerging-Developing Countries: Evidence from Indian Manufacturing Industries," Working Papers 2008-037, Madras School of Economics,Chennai,India.
    3. Alexander Coad & Jagannadha Pawan Tamvada, 2008. "The Growth and Decline of Small firms In Developing Countries," Papers on Economics and Evolution 2008-08, Philipps University Marburg, Department of Geography.
    4. Antonio Palestrini, 2015. "Firm Size Distribution and the Survival Bias," Economics Bulletin, AccessEcon, vol. 35(3), pages 1630-1637.
    5. Leslie A. Martin & Shanthi Nataraj & Ann E. Harrison, 2017. "In with the Big, Out with the Small: Removing Small-Scale Reservations in India," American Economic Review, American Economic Association, vol. 107(2), pages 354-386, February.
    6. Rajesh Raj, Seethamma Natarajan, 2007. "Technical Efficiency in the Informal Manufacturing Enterprises: Firm level evidence from an Indian state," MPRA Paper 7816, University Library of Munich, Germany.
    7. B.L. Pandit & N.S. Siddharthan, 2007. "Inter-firm differences in FII portfolio investment in India," Working Papers id:1243, eSocialSciences.
    8. Enrico Guzzini & Antonio Palestrini, 2016. "Growth in total factor productivity and links among firms," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 11(1), pages 35-55, April.
    9. Coad, Alex & Segarra, Agustí & Teruel, Mercedes, 2013. "Like milk or wine: Does firm performance improve with age?," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 173-189.
    10. Madhuri Saripalle, 2012. "Learning and Capability Acquisition: A Case Study of the Indian Automobile Industry," Working Papers 2012-065, Madras School of Economics,Chennai,India.
    11. Ferri Kuswantoro & M. Mohd Rosli & Radiah Abdul Kader, 2012. "Innovation In Distribution Channel(S) & Cost Efficiency On Small & Medium Enterprise Scales’ Performance In Indonesia," Journal of Global Entrepreneurship, Global Research Agency, vol. 3(1), pages 42-67, July.
    12. Alex Coad & Jaganaddha Tamvada, 2012. "Firm growth and barriers to growth among small firms in India," Small Business Economics, Springer, vol. 39(2), pages 383-400, September.

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