Gibrat's Law and the firm size/firm growth relationship in italian small scale services

Abstract

[fre] Plusieurs enquêtes sur les dynamiques internes des industries ont récemment permis d'en conclure que la loi de Gibrat ne tient pas. La découverte la plus importante a révélé que plus une entreprise grandit, plus son taux de croissance diminue. Dans ce document (à la recherche de preuves supplémentaires confortant les résultats obtenus récemment sur un échantillon important de nouvelles entreprises hollandaises de petites dimensions du secteur de l'hébergement) nous examinons si l'hypothèse selon laquelle les taux de croissance sont indépendants de la taille des entreprises peut être rejetée pour les services, comme ce fut le cas pour les entreprises de fabrication manufacturière, même pour les nouvelles entreprises italiennes du secteur de l'hébergement. En effet, sur un échantillon de nouvelles entreprises sélectionnées dans cinq groupes d'affaires différents, la loi de Gibrat est rejetée pour trois groupes et pour l'industrie dans son ensemble, alors qu'elle est confirmée pour les deux autres groupes. Par conséquent, dans certains groupes d'affaires du secteur de l'hébergement les plus petites parmi les nouvelles entreprises doivent initialement fournir des efforts poussés pour atteindre une taille comparable à celle des entreprises concurrentes de dimensions plus importantes. Cependant, les entreprises dont le taux de croissance est très rapide au cours des premières années d'activité connaissent ensuite un ralentissement de leur croissance lorsqu'elles atteignent une dimension assez importante pour accroître leurs chances de survie. [eng] Several surveys on intra-industry dynamics have recently reached the conclusion from a large body of evidence that Gibrat's Law does not hold, i.e., the main finding is that firm growth decreases with firm size. In this paper - in search of further evidence supporting the results recently obtained for a large sample of small scale Dutch incumbent and new-born firms in the hospitality sector - we examine whether the assumption that growth rates are independent of firm size can be rejected for the services, as it has been for manufacturing, also in the case of Italian new-born firms in the hospitality sector. In fact, based on a large sample composed only by new-born firms in five business groups, the evidence suggests that Gibrat's Law is rejected for three business groups ones and for the industry as a whole, whereas it is confirmed for the two remaining business groups. Thus, also in some business groups in the hospitality sector smaller ones among new-born firms have initially to rush in order to reach a size comparable to that of larger entrants. However, firms growing very fast in the initial year(s) after start-up turn out to slow down their growth once they reach a size large enough to enhance their likelihood of survival.

Entrepreneurship and the process of firms' entry, survival and growth

“…Indeed, patterns of entry may differ in different industrial sectors both with regard to the weight of "revolving door" firms (for example, entry mistakes should be less frequent in sectors characterised by higher sunk costs: see Sutton, 1991 andCabral 1995 andAudretsch, Santarelli and Vivarelli, 1999a) 19 and with regard to the relative importance of the different determinants of a firm's foundation (for instance, a progressive innovative aptitude may be dominant in fostering 19 On the other hand, according to Audretsch (1995), industries characterized by scale economies are better represented by the revolving door metaphor, while the Marshallian metaphor of the "forest" (new entries can force incumbents to exit via displacement, see Marshall, 1961) applies to the industries in which small firms tend to have the innovative advantage. entry in the "science based sectors", but not so crucial in traditional manufacturing and low-tech service sectors: see Pavitt, 1984;Audretsch, 1991;Piergiovanni and Santarelli, 1995;Breschi, Malerba and Orsenigo, 2000;Marsili, 2002;Piergiovanni et al, 2003).…”

“…14 entry in the "science based sectors", but not so crucial in traditional manufacturing and low-tech service sectors: see Pavitt, 1984;Audretsch, 1991;Piergiovanni and Santarelli, 1995;Breschi, Malerba and Orsenigo, 2000;Marsili, 2002;Piergiovanni et al, 2003).…”

Does the Firm Size Matter? An Empirical Enquiry into the Performance of Indian Manufacturing Firms

“…200 crore as the cut-off value for identifying medium and large size firms seems reasonable. Piergiovanni et al (2002) mentions that one major impediment to examining the relationship between firm size and growth is the lack of access to sufficiently large longitudinal data sets. 6 Homogeneity in the data of Electronics and Electrical industry allow us to club them under a single head EE.…”

The Impact of SMEs Financing on Business Growth in Nigeria: A Study of Keffi and Mararaba Metropolis

“…Thus, the size and age of firms have no effort on the growth of SMEs. The deterministic approach assumes, on the contrary, that differences in the rates of growth across firms depend on a set of observable industry and firm specific characteristics (Pier Giovanni et al, 2002). …”