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, 451-454
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.
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