On size and growth of business firms

Fabritiis, Gianni De; Pammolli, Fabio; Riccaboni, Massimo

doi:10.1016/s0378-4371(03)00043-8

Cited by 58 publications

(48 citation statements)

References 7 publications

(17 reference statements)

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“…Both growth rate distributions and exponents of the standard deviation are very similar, as suggested by the model. Empirical investigations deliver a β≈0.17 for firms and β≈0.15 for products [10,30].…”

Section: Comparison With Empirical Resultsmentioning

confidence: 96%

“…can be approximated in the upper tail by a Pareto distribution is well known [11,17,28]. Empirical studies of the worldwide pharmaceutical industry also revealed the relationship between the size of products and firms [29,30]. They found that the size distribution of products is lognormal, while for firms the upper tail has the form of a power law distribution.…”

Section: Comparison With Empirical Resultsmentioning

confidence: 99%

“…In order to show the applicability of the model we take as an example the empirical data for the total growth rate distribution obtained by De Fabritiis et al [30] and fitted the data with a Subbotin distribution (dotted line) as given by De Fabritiis and by Eq. (87) (fat line) displayed in Figure 1.…”

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confidence: 99%

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Evolutionary model of the growth and size of firms

Kaldasch

2012

Physica A: Statistical Mechanics and its Applications

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The key idea of this model is that firms are the result of an evolutionary process. Based on demand and supply considerations the evolutionary model presented here derives explicitly Gibrat's law of proportionate effects as the result of the competition between products. Applying a preferential attachment mechanism for firms the theory allows to establish the size distribution of products and firms. Also established are the growth rate and price distribution of consumer goods. Taking into account the characteristic property of human activities to occur in bursts, the model allows also an explanation of the size-variance relationship of the growth rate distribution of products and firms. Further the product life cycle, the learning (experience) curve and the market size in terms of the mean number of firms that can survive in a market are derived. The model also suggests the existence of an invariant of a market as the ratio of total profit to total revenue. The relationship between a neo-classic and an evolutionary view of a market is discussed. The comparison with empirical investigations suggests that the theory is able to describe the main stylized facts concerning the size and growth of firms.

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Section: Comparison With Empirical Resultsmentioning

confidence: 96%

Section: Comparison With Empirical Resultsmentioning

confidence: 99%

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Evolutionary model of the growth and size of firms

Kaldasch

2012

Physica A: Statistical Mechanics and its Applications

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“…Heavy-tailed growth patterns have been reported for example in pharmaceutical (Bottazzi et al 2001;De Fabritiis et al 2003;Fu et al 2005;Matia et al 2004), furniture, shoes and printing (Bottazzi andSecchi 2003a, 2006a), textiles (Bottazzi and Secchi 2003b), metals and chemicals (Bottazzi and Secchi 2003a) or food (Bottazzi and Secchi 2003a). Apart from these studies, little is known about the statistics of other types of organizations, for example publicly-driven ones.…”

Section: Sector and Industry Growthmentioning

confidence: 99%

Sector, industry and inter-organizational movement statistics in the Stockholm Region: informing organizational growth models

Mondani

2018

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Organizational growth processes exhibit interesting statistical regularities, chiefly the heavy-tailed pattern of the size and growth-rate (i.e. yearly change in size) distributions. In spite of its ubiquity, empirical studies of growth are often limited to private activities and specific sectors, and generative models on the other hand are built on simplified assumptions and only aim at reproducing stylized facts. In this study, we use a unique Swedish longitudinal database on employment in the Stockholm Region, to analyze the interplay between organizational growth statistics by ownership sector, industrial activity and interorganizational employee movements during a period of 14 years. We fit distributions for organizational size and growth rates. We find that the body of the aggregate growth-rate distribution is dominated by public sector growth, while the private sector dominates the tails. Industries with mostly public organizations tend to have a lognormal size distribution, while privately-owned industries are better fitted by a truncated power law. Growthrate distributions are fitted to an exponential power (Subbotin) distribution. We decompose the change in size into incoming and outgoing employee movements, and find that the distribution of aggregated movements is well approximated by a lognormal distribution. Most organizations that do not grow have however in-and outgoing movements, but these mostly cancel each other out.

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“…Some other models have also been presented, which are based on the competition dynamics [22], the information transition, herd behaviors [23], and the proportional growth for the firms' sizes and the number of independent constituent units of the firms. [24].…”

Section: Introductionmentioning

confidence: 99%

Bipartite producer–consumer networks and the size distribution of firms

Wang

Zhou

2006

Physica A: Statistical Mechanics and its Applications

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A bipartite producer-consumer network is constructed to describe the industrial structure. The edges from consumer to producer represent the choices of the consumer for the final products and the degree of producer can represent its market share. So the size distribution of firms can be characterized by producer's degree distribution. The probability for a producer receiving a new consumption is determined by its competency described by initial attractiveness and the self-reinforcing mechanism in the competition described by preferential attachment. The cases with constant total consumption and with growing market are studied. The following results are obtained: 1, Without market growth and a uniform initial attractiveness a, the final distribution of firm sizes is Gamma distribution for a > 1 and is exponential for a = 1. If a < 1, the distribution is power in small size and exponential in upper tail; 2, For a growing market, the size distribution of firms obeys the power law. The exponent is affected by the market growth and the initial attractiveness of the firms.

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On size and growth of business firms

Cited by 58 publications

References 7 publications

Evolutionary model of the growth and size of firms

Evolutionary model of the growth and size of firms

Sector, industry and inter-organizational movement statistics in the Stockholm Region: informing organizational growth models

Bipartite producer–consumer networks and the size distribution of firms

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