IDEAS home Printed from https://ideas.repec.org/a/taf/jbemgt/v7y2006i3p139-145.html
   My bibliography  Save this article

The growth opportunities for SMC?

Author

Listed:
  • Jan Bentzen
  • Erik Madsen
  • Valdemar Smith

Abstract

The extensive empirical literature on the validity of Gibrat's law does not in general verify the law as it finds that firms’ growth rates are negatively correlated with both firm size and age. However, some studies find that Gibrat's law holds for sub‐samples of firms such as large firms or firms belonging to special industries. It has been pointed out that these results are due to the fact that the likelihood of firm survival for natural reasons is positively related to firm size and age. This study uses a relatively large and representative sample of Danish firms to evaluate the validity of Gibrat's law for different kinds of firms over the period 1990 ‐ 2003. In contrast to the majority of earlier studies our analysis corrects for the bias in the estimations by using variables related to the survival of small firms.

Suggested Citation

  • Jan Bentzen & Erik Madsen & Valdemar Smith, 2006. "The growth opportunities for SMC?," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 7(3), pages 139-145.
    • Handle: RePEc:taf:jbemgt:v:7:y:2006:i:3:p:139-145
    DOI: 10.1080/16111699.2006.9636134
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/16111699.2006.9636134
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/16111699.2006.9636134?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
    2. Blonigen, Bruce A. & Tomlin, KaSaundra, 2001. "Size and growth of Japanese plants in the United States," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 931-952, May.
    3. Geroski, Paul, 2003. "The Evolution of New Markets," OUP Catalogue, Oxford University Press, number 9780199248896.
    4. D.B. Audretsch & L. Klomp & E. Santarelli & A.R. Thurik, 2004. "Gibrat's Law: Are the Services Different?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(3), pages 301-324, May.
    5. J. O. S. Wilson & J. E. MORRIS, 2000. "The Size and Growth of UK Manufacturing and Service Firms," The Service Industries Journal, Taylor & Francis Journals, vol. 20(2), pages 25-38, April.
    6. Hart, Peter E & Oulton, Nicholas, 1996. "Growth and Size of Firms," Economic Journal, Royal Economic Society, vol. 106(438), pages 1242-1252, September.
    7. Peter Hart & Nicholas Oulton, 1999. "Gibrat, Galton and Job Generation," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(2), pages 149-164.
    8. repec:nsr:niesrd:77 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jan Bentzen & Erik Madsen & Valdemar Smith, 2012. "Do firms’ growth rates depend on firm size?," Small Business Economics, Springer, vol. 39(4), pages 937-947, November.
    2. Stephanie Reitzinger & Astrid Pennerstorfer, 2021. "The size–growth relationship in the social services sector in Austria," Service Business, Springer;Pan-Pacific Business Association, vol. 15(3), pages 445-466, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan Bentzen & Erik Madsen & Valdemar Smith, 2012. "Do firms’ growth rates depend on firm size?," Small Business Economics, Springer, vol. 39(4), pages 937-947, November.
    2. Daunfeldt, Sven-Olov & Elert, Niklas & Lang, Ã…sa, 2012. "Does Gibrat's law hold for retailing? Evidence from Sweden," Journal of Retailing and Consumer Services, Elsevier, vol. 19(5), pages 464-469.
    3. Blandina Oliveira & Adelino Fortunato, 2008. "The dynamics of the growth of firms: evidence from the services sector," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(3), pages 293-312, July.
    4. Canarella, Giorgio & Miller, Stephen M., 2018. "The determinants of growth in the U.S. information and communication technology (ICT) industry: A firm-level analysis," Economic Modelling, Elsevier, vol. 70(C), pages 259-271.
    5. Sven-Olov Daunfeldt & Niklas Elert, 2013. "When is Gibrat’s law a law?," Small Business Economics, Springer, vol. 41(1), pages 133-147, June.
    6. Michael Pfaffermayr, 2007. "Firm Growth Under Sample Selection: Conditional σ-Convergence in Firm Size?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(4), pages 303-328, December.
    7. Blandina Oliveira & Adelino Fortunato, 2006. "Testing Gibrat's Law: Empirical Evidence from a Panel of Portuguese Manufacturing Firms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(1), pages 65-81.
    8. Ana Sofia Domingues Rodrigues & Christopher A. Laincz, 2004. "Understanding the Variations in Gibrat's Law with a Markov-Perfect Dynamic Industry Model," Computing in Economics and Finance 2004 173, Society for Computational Economics.
    9. Harald Oberhofer & Michael Pfaffermayr, 2013. "Firm growth in multinational corporate groups," Empirical Economics, Springer, vol. 44(3), pages 1435-1453, June.
    10. Rui Baptista & Roy Thurik, 2004. "The Relationship between Entrepreneurship and Unemployment: is Portugal an Outlier?," Papers on Entrepreneurship, Growth and Public Policy 2004-40, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    11. Peter Huber & Michael Pfaffermayr, 2010. "Testing for Conditional Convergence in Variance and Skewness: The Firm Size Distribution Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(5), pages 648-668, October.
    12. Hasan Ayaydin & Pinar Hayaloglu, 2014. "The Effect of Corruption on Firm Growth: Evidence from Firms in Turkey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(5), pages 607-624, May.
    13. Christopher A Laincz & Ana Sofia Domingues Rodrigues, "undated". "A Theoretical Foundation for Understanding Firm Size Distributions and Gibrat's Law," Discussion Papers 05/34, Department of Economics, University of York.
    14. Avenel, E. & Corolleur, F. & Gauthier, C. & Rieu, C., 2005. "Start-ups, firm growth and the consolidation of the French biotech industry," Working Papers 200503, Grenoble Applied Economics Laboratory (GAEL).
    15. Mark Rogers & Christian Helmers & Christoffer Koch, 2010. "Firm growth and firm size," Applied Economics Letters, Taylor & Francis Journals, vol. 17(16), pages 1547-1550.
    16. Gao, Baojun & Chan, Wai Kin (Victor) & Li, Hongyi, 2015. "On the increasing inequality in size distribution of China's listed companies," China Economic Review, Elsevier, vol. 36(C), pages 25-41.
    17. Harald Oberhofer, 2012. "Firm Growth, European Industry Dynamics and Domestic Business Cycles," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(3), pages 316-337, July.
    18. Dirk Burghardt & Marco Helm, 2015. "Firm growth in the course of mergers and acquisitions," Small Business Economics, Springer, vol. 44(4), pages 889-904, April.
    19. Halvarsson, Daniel, 2013. "Industry Differences in the Firm Size Distribution," Ratio Working Papers 214, The Ratio Institute.
    20. Peter Huber & Michael Pfaffermayr, 2007. "The Anatomy of the Firm Size Distribution: The Evolution of its Variance and Skewness," WIFO Working Papers 295, WIFO.

    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jbemgt:v:7:y:2006:i:3:p:139-145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TBEM20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.