The Relationship between Size and Growth: The Case of Italian Newborn Firms

Francesca Lotti (), Enrico Santarelli () and Marco Vivarelli ()

Applied Economics Letters, 2001, vol. 8, issue 7, pages 451-54

Abstract: This paper analyses the relationship between size and growth for a group of Italian newborn firms in the instruments industry. The main finding is that Gibrat's Law of Proportionate Effect exhibits a behaviour dependent on the firm's life cycle. In particular, even if in the years immediately following start-up the law could be rejected, since smaller firms have to rush in order to survive in the market, in subsequent years growth rates seem to converge towards a Gibrat-like pattern. This result is confirmed by the separate analyses carried out for micro-firms and larger firms. Copyright 2001 by Taylor and Francis Group

Date: 2001
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