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The Growth Dynamics Of German Business Firms

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  • JOHANNES VOIT

    (Theoretische Physik 1, Universität Bayreuth, D-95440 Bayreuth, Germany;
    Fakultät für Physik, Albert-Ludwigs-Universität, D-79104 Freiburg, Germany)

Abstract

We determine the distribution of size and growth rates of German business firms in 1987–1997. We find a log-normal size distribution. The distribution of growth rates has fat tails. It can be fitted to an exponential in a narrow central region and is dominated by finite-sample-size effects far in its wings. We study the dependence of the growth rate distribution on firm size: depending on procedures, we find almost no dependence when the center of the distribution is considered or, similar to previous work, a power-law when the wings are weighted more strongly. Correlations in the growth of different firms are essentially random. We determine the annual growth of the entire economy, and successfully correlate it with a standard economic indicator of business cycles in Germany. We emphasize possible problems related to the finite number of firms comprised in our database and its short extension in time.

Suggested Citation

  • Johannes Voit, 2001. "The Growth Dynamics Of German Business Firms," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 149-162.
    • Handle: RePEc:wsi:acsxxx:v:04:y:2001:i:01:n:s0219525901000127
    DOI: 10.1142/S0219525901000127
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    Citations

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    Cited by:

    1. Lina Cortés & Juan M. Lozada & Javier Perote, 2019. "Firm size and concentration inequality: A flexible extension of Gibrat’s law," Documentos de Trabajo de Valor Público 17205, Universidad EAFIT.
    2. L. Crosato & P. Ganugi, 2007. "Statistical regularity of firm size distribution: the Pareto IV and truncated Yule for Italian SCI manufacturing," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 16(1), pages 85-115, June.
    3. Segarra, Agustí & Teruel, Mercedes, 2012. "An appraisal of firm size distribution: Does sample size matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 314-328.
    4. Cortés, Lina M. & Mora-Valencia, Andrés & Perote, Javier, 2017. "Measuring firm size distribution with semi-nonparametric densities," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 485(C), pages 35-47.
    5. Lina M Cortés & Juan M Lozada & Javier Perote, 2021. "Firm size and economic concentration: An analysis from a lognormal expansion," PLOS ONE, Public Library of Science, vol. 16(7), pages 1-21, July.

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