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The Macroeconomic Environment and the Size Pattern of Business Firms


  • Fabrizio Trau


Empirical evidence shows that the second half of the 20th century has been characterised by a dramatic change in the evolutionary pattern of firms' size structure: the general tendency towards a growing importance of big business which marked the first phase of post-war development came to a halt in the early '70s, making way to a gradual decrease of the average size of firms and an employment shift towards smaller sized units. This paper argues that such a phenomenon is closely related to the major changes which have affected the macroeconomic environment over the same period, bringing to an end the so-called Golden Age. Particular emphasis is given to the role played, in this connection, by both the increase in the strength of global competition and structurally higher market uncertainty.

Suggested Citation

  • Fabrizio Trau, 2001. "The Macroeconomic Environment and the Size Pattern of Business Firms," Working Papers wp192, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp192
    Note: PRO-1

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    More about this item


    Golden Age and big business; uncertainty; competition and firm downsizing; vertical integration; business de-conglomeration.;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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