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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 Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Max Planck Institute of Economics - Max-Planck-Gesellschaft)

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," Post-Print halshs-00118801, HAL.
    • Handle: RePEc:hal:journl:halshs-00118801
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00118801
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    References listed on IDEAS

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    10. Alex Coad & Rekha Rao, 2006. "As luck would have it: innovation and market value in "complex technology" sectors," Cahiers de la Maison des Sciences Economiques r06069, Université Panthéon-Sorbonne (Paris 1).
    11. Alex Coad, 2006. "Towards an Explanation of the Exponential Distribution of Firm Growth Rates [A la recherche d'une explication de la distribution exponentielle des taux de croissance des firmes]," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00113346, HAL.
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    23. G. Bottazzi & E. Cefis & G. Dosi & A. Secchi, 2007. "Invariances and Diversities in the Patterns of Industrial Evolution: Some Evidence from Italian Manufacturing Industries," Small Business Economics, Springer, vol. 29(1), pages 137-159, June.
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    Cited by:

    1. Alex Coad & Max Planck, 2012. "Firms as Bundles of Discrete Resources – Towards an Explanation of the Exponential Distribution of Firm Growth Rates," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 38(2), pages 189-209.
    2. Alex Coad, 2007. "Firm Growth: a Survey," Post-Print halshs-00155762, HAL.
    3. Deschryvere, Matthias, 2008. "High Growth Firms and Job Creation in Finland," Discussion Papers 1144, The Research Institute of the Finnish Economy.
    4. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, vol. 37(4), pages 633-648, May.
    5. repec:ebl:ecbull:v:15:y:2006:i:13:p:1-10 is not listed on IDEAS
    6. Alex Coad & Rekha Rao, 2006. "As luck would have it: innovation and market value in "complex technology" sectors [Innovation et valeur boursière dans les secteurs de " technologies complexes "]," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00119062, HAL.
    7. Alex Coad & Rekha Rao, 2010. "Firm growth and R&D expenditure," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(2), pages 127-145.
    8. Marco Corsino & Roberto Gabriele & Enrico Zaninotto, 2009. "How Do Organizational Capabilities Shape Industry Dynamics ?," LEM Papers Series 2009/10, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    9. Coad, Alex, 2007. "Testing the principle of `growth of the fitter': The relationship between profits and firm growth," Structural Change and Economic Dynamics, Elsevier, vol. 18(3), pages 370-386, September.
    10. Alex Coad, 2007. "Exploring the "mechanics" of firm growth: evidence from a short-panel VAR," Post-Print halshs-00175048, HAL.
    11. 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.
    12. Toke Reichstein & Michael Dahl & Bernd Ebersberger & Morten Jensen, 2010. "The devil dwells in the tails," Journal of Evolutionary Economics, Springer, vol. 20(2), pages 219-231, April.
    13. Daria Ciriaci & Pietro Moncada-Paternò-Castello & Peter Voigt, 2016. "Innovation and job creation: a sustainable relation?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 189-213, August.
    14. Davidsson, Per & Steffens, Paul & Fitzsimmons, Jason, 2009. "Growing profitable or growing from profits: Putting the horse in front of the cart?," Journal of Business Venturing, Elsevier, vol. 24(4), pages 388-406, July.
    15. F. Zhou & W.J.W. Botzen, 2017. "The Impact of Natural Disasters on Firm Growth in Vietnam:: Interaction with Financial Constraints," Working Papers 17-20, Utrecht School of Economics.

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    More about this item

    Keywords

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

    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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