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Application of the Model as an Investment Tool

In: Modelling the Growth of Corporations

Author

Listed:
  • Jacques Solvay
  • Michèle Sanglier
  • Paul Brenton

Abstract

In Chapter 4 we provided an analysis of firm performance from an internal point of view and discussed the application of the approach to modelling corporate productivity growth as a tool for management. Here we discuss how the ideas concerning the nature of the firm and the way that it evolves and the model which reflects these can be used as an analytical tool from an external point of view, and specifically in terms of informing long-term portfolio investment choices. Our focus is entirely upon long-run investment decisions. This follows from the view of the firm as a complex self-organising institution which, because of increasing returns and positive feedback effects from learning and experience, tends to exhibit a sustained and constant process of growth. Deviations around this trend rate of growth tend to be associated with the business cycle. As we have argued earlier, in the medium term, firms are generally bound by their trend rate of growth of productivity.

Suggested Citation

  • Jacques Solvay & Michèle Sanglier & Paul Brenton, 2001. "Application of the Model as an Investment Tool," Palgrave Macmillan Books, in: Modelling the Growth of Corporations, chapter 6, pages 94-104, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-4039-0759-2_6
    DOI: 10.1057/9781403907592_6
    as

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