Toke Reichstein and Michael S. Dahl
Using Danish firm data covering almost 9000 observations, we find significant proof that firm growth cannot be considered as a simple Gibrat growth process. Key variables, such as size, age, geographical location and industry structure are tested against firm growth rates in turnover and employment. Besides running the regressions on all observations, we also consider and find highly interesting patterns in an industry context. Thus, we conclude that firm growth cannot be considered idiosyncratic. Firm growth is highly dependent on industry and geography.
Toke Reichstein and Michael S. Dahl (2004), “Are Firm Growth Rates Random? Patterns and Dependencies”, International Review of Applied Economics, Vol. 18, No. 2, pp. 225-246. ISSN: 0269-2171. [DOI Link]