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On Firm Growth in Networks

Author

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  • Riccaboni, Massimo
  • Pammolli, Fabio

Abstract

This paper is explorative in nature. Based on an empirical analysis of two different industrial settings (life sciences, LS; information and communication technologies, ICT), it investigates network growth and firm growth in networks. We find a remarkable correspondence between a few fundamental findings of the ‘old’ stochastic approach to the analysis of firm internal growth, and empirically observed patterns of firm external growth through collaborative agreements. We show that scale-free behavior in real-world industrial networks can be accounted for by a general and parsimonious model, originally developed by Herbert Simon in 1955, based on entry and proportional growth. However, relevant departures from the stochastic benchmark are revealed that cannot be ascribed to the effect of mergers and acquisitions (M&As) and growth autocorrelation. Moreover, different regimes of growth are found to be at work in the life sciences for originators versus developers of new business opportunities, reflecting the fact that growth is driven by specialization and division of labor in the processes of generation and attraction/development of technological opportunities.

Suggested Citation

  • Riccaboni, Massimo & Pammolli, Fabio, 2001. "On Firm Growth in Networks," MPRA Paper 15964, University Library of Munich, Germany, revised 12 Nov 2001.
    • Handle: RePEc:pra:mprapa:15964
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    References listed on IDEAS

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    1. Pammolli, Fabio & Riccaboni, Massimo, 2002. "Technological Regimes and the Growth of Networks: An Empirical Analysis," Small Business Economics, Springer, vol. 19(3), pages 205-215, November.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Giarratana, Marco S., 2004. "The birth of a new industry: entry by start-ups and the drivers of firm growth: The case of encryption software," Research Policy, Elsevier, vol. 33(5), pages 787-806, July.
    2. repec:hal:spmain:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS
    3. Olie, R.L. & Glunk, U. & Heijltjes, M.G., 2003. "Continuity and renewal at the top: performance effects of the level, extent, type and frequency of top management team changes," Research Memorandum 049, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    4. Robin Cowan & Nicolas Jonard & Jean-Benoit Zimmermann, 2007. "Bilateral Collaboration and the Emergence of Innovation Networks," Management Science, INFORMS, vol. 53(7), pages 1051-1067, July.
    5. Messeni Petruzzelli, Antonio, 2019. "Trading knowledge for status: Conceptualizing R&D alliance formation to achieve ambidexterity," Technological Forecasting and Social Change, Elsevier, vol. 145(C), pages 36-42.
    6. Anna Giunta & Domenico Scalera & Annamaria Nifo, 2008. "Divisione del lavoro, crescita e divari di performance nell'industria italiana degli anni '90," Departmental Working Papers of Economics - University 'Roma Tre' 0097, Department of Economics - University Roma Tre.
    7. Kelchtermans, Stijn & Leten, Bart & Rabijns, Maarten & Riccaboni, Massimo, 2022. "Do licensors learn from out-licensing? Empirical evidence from the pharmaceutical industry," Technovation, Elsevier, vol. 112(C).
    8. Mario V. Tomasello & Mauro Napoletano & Antonios Garas & Frank Schweitzer, 2017. "The rise and fall of R&D networks," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(4), pages 617-646.
    9. Fabio Pammolli & Massimo Riccaboni & Alessandro Spelta, 2021. "The network origins of Schumpeterian innovation," Journal of Evolutionary Economics, Springer, vol. 31(5), pages 1411-1431, November.
    10. Luca Verginer & Federica Parisi & Jeroen van Lidth de Jeude & Massimo Riccaboni, 2022. "The Impact of Acquisitions in the Biotechnology Sector on R&D Productivity," Papers 2203.12968, arXiv.org, revised Jan 2024.
    11. Massimo Riccaboni & Alessandro Rossi & Stefano Schiavo, 2013. "Global networks of trade and bits," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 8(1), pages 33-56, April.
    12. M. C. Guardo & K. R. Harrigan, 2016. "Shaping the path to inventive activity: the role of past experience in R&D alliances," The Journal of Technology Transfer, Springer, vol. 41(2), pages 250-269, April.
    13. Nicholas S. Vonortas & Koichiro Okamura, 2013. "Network structure and robustness: lessons for research programme design," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(4), pages 392-411, June.
    14. Anna Giunta & Annamaria Nifo & Domenico Scalera, 2012. "Subcontracting in Italian Industry: Labour Division, Firm Growth and the North--South Divide," Regional Studies, Taylor & Francis Journals, vol. 46(8), pages 1067-1083, December.
    15. repec:spo:wpmain:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS
    16. M. Koenig & Claudio J. Tessone & Yves Zenou, "undated". "A Dynamic Model of Network Formation with Strategic Interactions," Working Papers CCSS-09-006, ETH Zurich, Chair of Systems Design.
    17. Cowan, Robin & Jonard, Nicolas & Zimmermann, J-B, 2004. "Networks as Emergent Structures from Bilateral Collaboration," Research Memorandum 017, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    18. Michael D. König & Xiaodong Liu & Yves Zenou, 2019. "R&D Networks: Theory, Empirics, and Policy Implications," The Review of Economics and Statistics, MIT Press, vol. 101(3), pages 476-491, July.
    19. repec:hal:wpspec:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS
    20. , David, 2016. "The formation of networks with local spillovers and limited observability," Theoretical Economics, Econometric Society, vol. 11(3), September.
    21. Cowan, Robin, 2004. "Network models of innovation and knowledge diffusion," Research Memorandum 016, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    22. Daniele Schilirò, 2007. "Knowledge, Learning, Networks and Performance of Firms in Knowledge-Based Economies," CRANEC - Working Papers del Centro di Ricerche in Analisi economica e sviluppo economico internazionale crn0702, Università Cattolica del Sacro Cuore, Centro di Ricerche in Analisi economica e sviluppo economico internazionale (CRANEC).
    23. repec:spo:wpecon:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS

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    More about this item

    Keywords

    Firm growth; Network growth; Biotechnology; Information and communication technologies;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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