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Understanding the processes of firm growth - a closer look at serial growth rate correlation

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  • Alex Coad

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Max Planck Institute of Economics - Evolutionary Economics Group)

Abstract

Serial correlation in annual growth rates carries a lot of information on growth processes - it allows us to directly observe firm performance as well as to test hypotheses. Using a 7-year balanced panel of 10 000 French manufacturing firms, we observe that small firms typically are subject to negative correlation of growth rates, whereas larger firms display positive correlation. Furthermore, we find that those small firms that experience extreme positive or negative growth in any one year are unlikely to repeat this performance in the following year.

Suggested Citation

  • Alex Coad, 2006. "Understanding the processes of firm growth - a closer look at serial growth rate correlation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00118801, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00118801 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00118801
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    References listed on IDEAS

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    1. Giulio Bottazzi & Alex Coad & Nadia Jacoby & Angelo Secchi, 2011. "Corporate growth and industrial dynamics: evidence from French manufacturing," Applied Economics, Taylor & Francis Journals, vol. 43(1), pages 103-116.
    2. 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.
    3. Chesher, Andrew, 1979. "Testing the Law of Proportionate Effect," Journal of Industrial Economics, Wiley Blackwell, vol. 27(4), pages 403-411, June.
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    6. Alex Coad & Rekha Rao, 2006. "As luck would have it : innovation and market value in "complex technology" sectors," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00119062, HAL.
    7. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, December.
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    11. Alex Coad, 2006. "Towards an explanation of the exponential distribution of firm growth rates," Cahiers de la Maison des Sciences Economiques r06025, Université Panthéon-Sorbonne (Paris 1).
    12. Geroski, Paul A & Machin, Stephen & Walters, Christopher F, 1997. "Corporate Growth and Profitability," Journal of Industrial Economics, Wiley Blackwell, vol. 45(2), pages 171-189, June.
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    Cited by:

    1. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, pages 633-648.
    2. Alex Coad, 2007. "A Closer Look at Serial Growth Rate Correlation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(1), pages 69-82, August.

    More about this item

    Keywords

    quantile regression; Serial correlation; firm growth; quantile regression.; Autocorrélation; croissance des firmes; régression par quantile.;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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