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Are Firm Growth Rates Random? Analysing Patterns and Dependencies

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  • Toke Reichstein
  • Michael Dahl

Abstract

Using Danish firm data covering almost 9000 observations, we find significant proof that firm growth cannot be considered as a simple Gibrat growth process. Key variables, such as size, age, geographical location and industry structure are tested against firm growth rates in turnover and employment. Besides running the regressions on all observations, we also consider and find highly interesting patterns in an industry context. Thus, we conclude that firm growth cannot be considered idiosyncratic. Firm growth is highly dependent on industry and geography.

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  • Toke Reichstein & Michael Dahl, 2004. "Are Firm Growth Rates Random? Analysing Patterns and Dependencies," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(2), pages 225-246.
    • Handle: RePEc:taf:irapec:v:18:y:2004:i:2:p:225-246
    DOI: 10.1080/0269217042000186705
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    4. Jan de Kok & Haibo Zhou & Chantal Hartog, 2012. "The risk of growing fast," Scales Research Reports H201119, EIM Business and Policy Research.
    5. Otto, Anne & Fornahl, Dirk, 2008. "Long-term growth determinants of young businesses in Germany : effects of regional concentration and specialisation," IAB-Discussion Paper 200813, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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    14. Daskalopoulou, Irene & Petrou, Anastasia, 2010. "Entrepreneurial growth expectations and information flows in networks," MPRA Paper 22663, University Library of Munich, Germany.
    15. João Ferreira Brito & Pedro Cosme Costa Vieira, 2013. "Economic Growth as the Result of Firms’ Aggregate Performance: Evidence from the OECD Countries," Economics and Management Research Projects: An International Journal, Open Access International Journals, vol. 3(1), pages 24-31, December.
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