Schumpeterian Dynamism or Socialization: Persistence of Firm Dominance

Dieter Van Esbroeck

No 760653, Working Papers of VIVES - Research Centre for Regional Economics from KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics

Abstract: This paper assesses whether the persistence of firm dominance reflects Schumpeterian dynamism or socialization. A cross-country comparison encompassing Europe, North America and Asia using the Forbes Global 2000 reveals comparable levels of dynamism. The evolution over time is examined for the United States based on Compustat and the Fortune 500, finding an increase in dynamism since 1950. An analysis of the Brussels Stock Exchange shows that the survival probability at the top has remained fairly stable in Belgium for almost two centuries. Generally, firms have a similar chance of survival at the top irrespective of their ranking and firms that have been present longer at the top have a slight advantage for persistence. Multiple mechanisms are identified as potential drivers. The empirical results suggest a Poisson process to model large firm dynamics which, combined with geometric Brownian motion, leads to power-law behavior in the tail of firm size.

Keywords: Firm dynamics; superstar firms; business dynamism; creative destruction. (search for similar items in EconPapers)
Pages: 59
Date: 2025-02-26
Note: paper number 101
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Published in VIVES Discussion Paper

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Persistent link: https://EconPapers.repec.org/RePEc:ete:vivwps:760653

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