Firms as Bundles of Discrete Resources - Towards an Explanation of the Exponential Distribution of Firm Growth Rates

Alex Coad ()

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: A robust feature of the corporate growth process is the Laplace, or symmetric exponential, distribution of firm growth rates. In this paper, we sketch out a class of simple theoretical models capable of explaining this empirical regularity. We do not attempt to generalize on where growth opportunities comme from, but rather we focus on how firms build upon growth opportunites. We borrow ideas from the self-organizing criticality literature to explain how the interdependent nature of discrete resources may lead to the triggering off of a series of additions to a firm's resources. In a first formal model we consider the case of employment growth in a hierarchy, and observe that growth rates follow an exponential distribution. In a second model we include plant and capital as resources and we are able to reproduce a number of stylized facts about firm growth.

Keywords: Firm growth rates; exponential distribution; hierarchy; growth autocorrelation.; growth autocorrelation; Croissance des firmes; distribution exponentielle; hiérarchie. (search for similar items in EconPapers)
Date: 2008-10
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00331282
References: Add references at CitEc
Citations:

Published in 2008

Downloads: (external link)
https://shs.hal.science/halshs-00331282/document (application/pdf)

Related works:
Journal Article: Firms as Bundles of Discrete Resources – Towards an Explanation of the Exponential Distribution of Firm Growth Rates (2012)
Working Paper: Firms as Bundles of Discrete Resources - Towards an Explanation of the Exponential Distribution of Firm Growth Rates (2008)
Working Paper: Firms as bundles of discrete resources - towards an explanation of the exponential distribution of firm growth rates (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00331282

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().