Does Gibrat’s Law Hold in the Case of Young, Small Firms?

Lotti, Francesca ; Santarelli, Enrico ; Vivarelli, Marco (1999) Does Gibrat’s Law Hold in the Case of Young, Small Firms? Bologna: Dipartimento di Scienze economiche DSE, p. 20. DOI 10.6092/unibo/amsacta/4948. In: Quaderni - Working Paper DSE (361). ISSN 2282-6483.
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Abstract

According to Gibrat’s Law of Proportionate Effect, the growth rate of a given firm is independent of its size at the beginning of the examined period. This paper investigates whether Gibrat’s Law holds for new entrants in a given industry: that is for new small firms in the early stage of their life cycle. The main finding is that in some (but not in all) selected industries in Italian manufacturing Gibrat’s Law fails to hold in the years immediately following start-up, when smaller firms have to rush in order to achieve a size large enough to enhance their likelihood of survival. Conversely, in subsequent years the patterns of growth of smaller firms do not differ significantly from those of larger ones, and the Law is therefore confirmed.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lotti, Francesca
Santarelli, Enrico
Vivarelli, Marco
Keywords
Market dynamics; young firms; small firms; Gibrat’s Law; sample selection
Subjects
ISSN
2282-6483
DOI
Deposit date
05 Apr 2016 09:47
Last modified
05 Apr 2016 09:47
URI

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