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Long-term firm growth properties derived from short-term laws of sales and number of employees in Japan and France

Author

Listed:
  • Atushi Ishikawa

    (Kanazawa Gakuin University)

  • Shouji Fujimoto

    (Kanazawa Gakuin University)

  • Takayuki Mizuno

    (National Institute of Informatics
    The Graduate University for Advanced Studies [SOKENDAI]
    JST PRESTO)

  • Tsutomu Watanabe

    (University of Tokyo)

Abstract

In Japan, we observed rapid power law growth in the first 10 years of the existence of firms and subsequent slow exponential growth on their ages not only in their sales but also in their number of employees. We also confirmed similar long-term properties in France. These observations were found by employing around one million bits of exhaustive financial data of firms in Japan and France from 2004 to 2013. Comparing the parameters, the power law and exponential growth indices of sales are larger than those of the number of employees. Such long-term growth is derived from non-Gibrat’s law in the middle-scale range and Gibrat’s law in the large-scale range. We observed both non-Gibrat’s law and Gibrat’s law, which denotes the dependence of the growth rate distributions on the initial values, for two successive years in the short-term. By introducing a stochastic model based on the short-term laws, we showed that non-Gibrat’s law and Gibrat’s law lead to power law growth and the subsequent exponential growth, respectively.

Suggested Citation

  • Atushi Ishikawa & Shouji Fujimoto & Takayuki Mizuno & Tsutomu Watanabe, 2016. "Long-term firm growth properties derived from short-term laws of sales and number of employees in Japan and France," Evolutionary and Institutional Economics Review, Springer, vol. 13(2), pages 409-422, December.
    • Handle: RePEc:spr:eaiere:v:13:y:2016:i:2:d:10.1007_s40844-016-0055-0
    DOI: 10.1007/s40844-016-0055-0
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    More about this item

    Keywords

    Econophysics; Firm growth; Gibrat’s law; Non-Gibrat’s law;
    All these keywords.

    JEL classification:

    • D39 - Microeconomics - - Distribution - - - Other

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