Empirical Implications of Alternative Models of Firm Dynamics

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis paper considers two models for analyzing the dynamics of firm behavior that allow for heterogeneity among firms, idiosyncratic (or firm specific) sources of uncertainty, and discrete events (exit and entry). Models with these characteristics are needed for empirical analysis of the causes and effects of the dispersion in the distribution of outcome paths among firms, and for correcting for the self-selection induced by liquidation in the empirical analysis of firms responses to alternative policy and environmental changes. It is shown that the two models have different nonparametric implications, and that these are rich enough to enable the construction of both testing, and selection correction, procedures that are both, fully consistent with the theoretical model, and easy to implement. The paper concludes by checking for the implications of the two models on an eight year panel of Wisconsin firms. We find one model to be consistent with the data on manufacturing, and the other to be consistent with the data for retail trade.

The death of Canadian manufacturing plants: heterogeneous responses to changes in tariffs and real exchange rates

“…One stylized fact (Dunne et al 1989;Baldwin 1995;Geroski 1995) is that size and age are positively related to a plant's probability of survival. Both the ''liability of newness'' effect (Stinchcombe 1965) and the selection models (Jovanovic 1982;Pakes and Ericson 1998) suggest that new entrants and smaller plants are at a greater risk of failure compared to older and larger plants. New plants go through a process of learning after entry.…”

The medium-term effect of R&D on firm growth

“…The forward-looking firm makes a decision over its level of research input, based on expected returns to R&D (in terms of sales or directly in terms of profits) that affects the stochastic innovation process. Innovation success in turn automatically raises the firms' profitability or productivity level (Aghion and Howitt 1992;Pakes and Ericson 1998;Klette and Griliches 2000). Such stochastic and optimizing representation has however been challenged by models in which boundedly rational agents search for more productive techniques in an uncertain environment, in which the impact of innovation on firm growth is itself random (Nelson and Winter 1982).…”

“…In particular, the processes generating high-growth firms have become the focus of attention of several works (Henrekson and Johansson 2010). Supported by a strong and diverse theoretical framework (Nelson and Winter 1982;Aghion and Howitt 1992;Dosi et al 1995;Pakes and Ericson 1998;Klette and Griliches 2000), innovation is one of the usual suspects in defining differences in performance (and especially sustained performance) among firms. Indeed, stimulating R&D is an important way to increase the growth rate of the ''elite-growth'' firms (Stam and Wennberg 2009).…”

The Relationship between Effective and Equitable Water Allocation, Local Rice Farmer Participation and Economic Well-Being: Insights from Thailand’s Chiang Mai Province

“…In comparison, the CIE farmer group could earn additional income from other sources as community enterprise membership provides CIE farmers with access to other marketing channels and new markets. The small community enterprises run by a large group of sophisticated proprietors are more successful than those endowed with a smaller stock of human capital [58][59][60].…”