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When is Gibrats's law a law?
Örebro University, Örebro University School of Business.
2013 (English)In: Small Business Economics, ISSN 0921-898X, E-ISSN 1573-0913, Vol. 41, no 1, p. 133-147Article in journal (Refereed) Published
Abstract [en]

The purpose of this article is to investigate if the industry context matters for whether Gibrat’s law is rejected or not using a dataset that consists of all limited firms in five-digit NACE-industries in Sweden during 1998–2004. The results reject Gibrat’s law on an aggregate level, since small firms grow faster than large firms. However, Gibrat’s law is confirmed about as often as it is rejected when industry-specific regressions are estimated. It is also found that the industry context—e.g., minimum efficient scale, market concentration rate, and number of young firms in the industry—matters for whether Gibrat’s law is rejected or not.

Place, publisher, year, edition, pages
Dordrecht, Netherlands: Springer, 2013. Vol. 41, no 1, p. 133-147
Keywords [en]
Firm growth; Firm size; Job creation; Small firms
National Category
Economics
Research subject
Economics; Economics
Identifiers
URN: urn:nbn:se:oru:diva-33105ISI: 000319774900008OAI: oai:DiVA.org:oru-33105DiVA, id: diva2:687821
Available from: 2014-01-15 Created: 2014-01-15 Last updated: 2018-03-08Bibliographically approved
In thesis
1. Economic dynamism: essays on firm entry and firm growth
Open this publication in new window or tab >>Economic dynamism: essays on firm entry and firm growth
2014 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The topic of this thesis is economic dynamism. The five articles contribute to the literature on firm entry and firm growth. Studies are based on a dataset covering all Swedish limited liability firms between 1997 and 2010.

The first article investigates conditions for firm entry in Sweden, distinguishing regular entrants from entrants that survive for at least two years, modelling the firm entry decision using count data models. While high income and a well-educated population had a positive effect, the effect was more important for surviving entrants. The second article uses a similar method, but focuses on wholesale industries and distinguishes between regular entry and in migration of firms, i.e. when an incumbent firm relocates its operations. Access to a university, many educated workers and low local taxes had positive effects. Better access to infrastructure had a strong positive effect on entrants, but it was smaller for in-migrating firms. The third article investigates if the industry context matters for whether Gibrat’s law holds, i.e. whether firm growth is independent of firm size. The law is found more likely to be rejected in industries with a high minimum efficient scale and a large number of firms located in metropolitan areas, but more likely to hold in industries with high market concentration and more group ownership. The fourth and fifth article contribute to the high-growth firms (HGFs) literature. In the fourth article it is examined whether the way HGFs are defined matters for the policy implications. It is found that the economic contributions of HGFs differ significantly depending on definition. Young firms are however more likely to be HGFs irrespective of definition. The fifth article considers the frequent argument that policymakers should target high-tech firms, i.e., firms with high R&D intensity, because such firms are thought more likely to become HGFs. We examine this assumption by studying the industry distribution of HGFs. Results indicate that industries with high R&D intensity, ceteris paribus, can be expected to have a lower share of HGFs than can industries with lower R&D intensity. By contrast, we find that HGFs are overrepresented in service industries with a high share of human capital.

Place, publisher, year, edition, pages
Örebro: Örebro university, 2014. p. 65
Series
Örebro Studies in Economics, ISSN 1651-8896 ; 25
Keywords
entrepreneurship, innovation, firm entry, regional economics, Gibrat's law, firm growth, firm size, gazelles, high-growth firms, highimpact firms
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:oru:diva-34804 (URN)978-91-7529-030-0 (ISBN)
Public defence
2014-09-19, Forumhuset, Biografen, Örebro universitet, Fakultetsgatan 1, Örebro, 13:15 (English)
Opponent
Supervisors
Available from: 2014-04-22 Created: 2014-04-22 Last updated: 2017-10-17Bibliographically approved

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