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Sources of Firm Life-Cycle Dynamics: Size vs. Age Effects

Author

Listed:
  • Lorenz Kueng

    (University of Lugano - Faculty of Economics; Swiss Finance Institute; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Northwestern University - Kellogg School of Management)

  • Mu-Jeung Yang

    (University of Washington - Department of Economics)

  • Bryan Hong

    (New York University (NYU) - Leonard N. Stern School of Business)

Abstract

What determines the life-cycle of businesses? Exploiting unique firm-level panel data on internal organization and innovation we establish three key sets of stylized facts to inform recent theories of firm life-cycles. First, life-cycle effects are driven by startups, not by new establishments of existing firms. Second, organizational restructuring and innovation are both strongly correlated with firm growth but not with firm age, in contrast to passive learning theories of firm dynamics. Third, there are important sectoral differences in innovation activities which are monotonically increasing in firm size for manufacturing firms but hump-shaped for firms in service industries.

Suggested Citation

  • Lorenz Kueng & Mu-Jeung Yang & Bryan Hong, 2020. "Sources of Firm Life-Cycle Dynamics: Size vs. Age Effects," Swiss Finance Institute Research Paper Series 20-34, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2034
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    Keywords

    firm life-cycle; organizational capital; innovation;
    All these keywords.

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