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Does firm size improve firm growth? Empirical evidence from an emerging economy

Author

Listed:
  • Bentzen Jan

    (1 Department of Economics and Business Economics, Aarhus University, Fuglesangs Alle 4, 8210 Aarhus V, Denmark)

  • Tung Le Thanh

    (2 Faculty of Economics and Public Management, Ho Chi Minh City Open University, Ho Chi Minh City, Vietnam)

Abstract

This study aims to examine the relationship between firm size and firm growth in Vietnam. The literature does not in general give support to Gibrat’s law stating that the expected increase in firm size is proportionate to its initial size, or that firm growth rates are independent of firm size. The present study relies on a sample of 578 listed Vietnamese companies representing eight different industries and covering the period 2010 to 2020. The analysis reveals that growth in firm revenues does not give support to a hypothesis of independence of initial firm sizes. When the firm size is measured by total assets the opposite result appears, i.e. the Gibrat’s law is not rejected. When including also the age of the firms in the test methodology the conclusion will be that firm growth—measured by revenue or assets—in all cases will decrease with firm size.

Suggested Citation

  • Bentzen Jan & Tung Le Thanh, 2023. "Does firm size improve firm growth? Empirical evidence from an emerging economy," Economics and Business Review, Sciendo, vol. 9(3), pages 9-21, October.
    • Handle: RePEc:vrs:ecobur:v:9:y:2023:i:3:p:9-21:n:12
    DOI: 10.18559/ebr.2023.3.793
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Gibrat’s law; corporate growth; Vietnamese companies; emerging economy; panel data analysis;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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