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Going Through a Crisis: Firm Devekopment and Firm SIze Distributions

Listed author(s):
  • Christian Cordes

    (University of Bremen, Faculty of Business Studies and Economics, Hochschulring 4, 28359 Bremen, Germany)

  • Tong-Yaa Su

    (University of Bremen, Faculty of Business Studies and Economics, Hochschulring 4, 28359 Bremen, Germany)

  • Pontus Strimling

    (Maelardalen University, Department of Mathematics and Physics, Hoegskoleplan 1, Rosenhill, Vaesteas, Sweden)

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 steady-state 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 these growth crises. Together, these processes generate empirically observable size distributions of firms including right-skewed and Pareto distributions as well as self-reinforcing spinoff processes that affect an industry’s FSD.v

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File URL: ftp://137.248.191.199/RePEc/esi/discussionpapers/2015-06.pdf
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Paper provided by Philipps University Marburg, Department of Geography in its series Papers on Economics and Evolution with number 2015-06.

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Length: 25 pages
Date of creation: 16 Dec 2015
Handle: RePEc:esi:evopap:2015-06
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Deutschhausstrasse 10, 35032 Marburg

Phone: 064212824257
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Web page: http://www.uni-marburg.de/fb19/
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