A critical human group size and firm size distributions in industries
Tong-Yaa Su () and
Pontus Strimling ()
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Tong-Yaa Su: University of Bremen
Pontus Strimling: Stockholm University
Journal of Bioeconomics, 2019, vol. 21, issue 2, No 3, 123-144
Abstract Initially taking a theoretical stance, this paper relates firm-level processes and size distributions of firms at the industry level. An analytically tractable model explores how firm growth, exit, and spinoff activity in combination with systematically appearing growth crises in organizational development translate into specific firm size distributions (FSDs). Based on anthropological, social-psychological, and economic evidence on the effects of increasing group size on performance, the model features a critical organizational size that triggers growth crises. These processes generate size distributions of firms including different right-skewed distributions observed in the empirical literature and self-reinforcing spinoff processes that affect an industry’s FSD.
Keywords: Firm growth; Critical group size; Firm size distributions; Industry evolution; L11; D21; C61 (search for similar items in EconPapers)
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