Firm Size Distribution in the Central European Context

Petra Štamfestová, Lukáš Sobíšek and Jiří Hnilica

Central European Business Review, 2023, vol. 2023, issue 5, 151-175

Abstract: This article analyses the distribution of firms by size in six selected countries in 2012 and 2017. Estimates are always made for the whole economy and two subgroups of firms. We compare the Visegrad Four countries (Czech Republic, Hungary, Poland and Slovakia) with similar economic activities and two neighbouring economically more developed countries (Germany and Austria). As the main objective of the article, we describe the distribution of firms by verifying the validity of Zipf's law in selected economies and their sectors. The results confirm the positively skewed distribution of company sizes measured by sales revenues, but Zipf's law does not apply to the distribution of all companies by the magnitude of sales in the whole economy (or in an economic subgroup), but only to sections in the right tail of the distribution (companies with higher turnover within the whole economy), which is in line with numerous research studies. Implications for Central European audience: This article attempts to contribute to the state of the art of firm size distribution in two ways. Firstly, it reviews a wide range of research studies looking into the existence of power laws in firm size distribution. Secondly, it analyses the distribution of firms by size in six selected Central European countries in 2012 and 2017, where four sample countries were burdened with interrupted business activities during a communist regime (Czech Republic, Hungary, Poland and Slovakia), and two countries are their neighbours not exposed to changes in the political regime (Germany and Austria).

Keywords: firm size distribution; power law; Zipf´s law (search for similar items in EconPapers)
JEL-codes: L11 L25 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.18267/j.cebr.345

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