Explaining the distribution of firm growth rates

Bottazzi, Giulio; Secchi, Angelo

doi:10.1111/j.1756-2171.2006.tb00014.x

Cited by 314 publications

(230 citation statements)

References 26 publications

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“…Bottazzi and Secchi [7] replicate these findings and report a Laplace growth distribution for Italian manufacturing firms during the period 1989-96.…”

Section: Firm Growth Distributionssupporting

confidence: 66%

The social architecture of capitalism

Wright¹

2005

Physica A: Statistical Mechanics and its Applications

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A dynamic model of the social relations between workers and capitalists is introduced. The model is deduced from the assumption that the law of value is an organising principle of modern economies. The model self-organises into a dynamic equilibrium with statistical properties that are in close qualitative and in many cases quantitative agreement with a broad range of known empirical distributions of developed capitalism, including the power-law distribution of firm size, the Laplace distribution of firm and GDP growth, the lognormal distribution of firm demises, the exponential distribution of the duration of recessions, the lognormal-Pareto distribution of income, and the gamma-like distribution of the rate-of-profit of firms. Normally these distributions are studied in isolation, but this model unifies and connects them within a single causal framework. In addition, the model generates business cycle phenomena, including fluctuating wage and profit shares in national income about values consistent with empirical studies. A testable consequence of the model is a conjecture that the rate-of-profit distribution is consistent with a parameter-mix of a ratio of normal variates with means and variances that depend on a firm size parameter that is distributed according to a power-law.

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“…Bottazzi and Secchi [7] replicate these findings and report a Laplace growth distribution for Italian manufacturing firms during the period 1989-96.…”

Section: Firm Growth Distributionssupporting

confidence: 66%

The social architecture of capitalism

Wright¹

2005

Physica A: Statistical Mechanics and its Applications

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“…One of the major robust stylised fact emerging from industrial economics is that the firm growth rates distribution is characterised by wide heterogeneity and a tent shape, whatever the level of sectoral aggregation considered (Stanley et al, 1996;Bottazzi and Secchi, 2006;Coad, 2009;Dosi, 2007). In this respect, due to its inherent nature, the processes leading from innovative input to innovative output may show different effects according to the different positioning of a firm in the growth rates distribution, beyond the effect on growth of the "average firm".…”

Section: Asymmetric Effects Of Innovation Across Growth Quantilesmentioning

confidence: 99%

Innovation Strategies and Firm Growth

2016

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“…In the probability density function, this would show up as a sharp peak around the modal value, and fat tails. These are features of the exponential power distribution fitted by Bottazzi and Secchi (2006) on growth rates of business firms. As the authors have shown, reinforcing dynamics is a key to the emergence of exponential tails.…”

Section: Variance-size Scalingmentioning

confidence: 99%

Growing like mushrooms? Sectoral evidence from four large European economies

Castaldi

Sapio

2009

Schumpeterian Perspectives on Innovation, Competition and Growth

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This paper follows a stream of literature on the empirics of sectoral growth rates, originated by Castaldi and Dosi (Income levels and income growth. Some new cross-country evidence and some interpretative puzzles. Our aim is to discuss the statistical properties of growth rates in light of a 'mushroom vision' of growth. In our analysis, we focus on the growth of value added in NACE five-digit sectors in France, Germany, Italy and the United Kingdom between 1995 and 2003. We find that the volatility of sectoral growth rates is negatively correlated with sectoral size, according to a power law, but with steeper slopes than for firms and We wish to thank Giovanni Dosi, Angelo Secchi, Edwin Stuivenwold and Grid Thoma for helpful discussions, and participants of the 11 th International Schumpeter Society Conference in Sophia Antipolis (France) for useful comments. The paper was improved thanks to comments by the editor, Uwe Cantner, and by an anonymous referee. We kindly acknowledge support from the EU funded project DIME. Sandro Sapio also acknowledges support from the EU funded project CO3. All errors remain our own. U.S. sectors. Rescaled sectoral growth rates are well-described by a Laplace distribution in most years. The outcomes of this statistical analysis provide a further empirical foundation to a view of sectoral growth, wherein interfirm correlations, market concentration, and inter-sectoral feedbacks play a major role.

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Explaining the distribution of firm growth rates

Cited by 314 publications

References 26 publications

The social architecture of capitalism

The social architecture of capitalism

Innovation Strategies and Firm Growth

Growing like mushrooms? Sectoral evidence from four large European economies

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