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| Author: | Lotti, F. Santarelli, E. Vivarelli, M. |
| Title: | Defending Gibrat's Law as a long-run regularity |
| Journal: | Small business economics
2009 : JAN, VOL. 32:1, p. 31-44 |
| Index terms: | small business companies growth |
| Freeterms: | characteristics |
| Language: | eng |
| Abstract: | According to Gibrat's Law of Proportionate Effect, the growth rate of a given firm is independent of its size at the beginning of the examined period. More recent research generally rejects the Law, whereas earlier studies tend to confirm it. In this article, these two streams of literature adjusted together, taking into account the role of market selection (here as: m-sel.) and learning in reshaping a given population (as: popln.) of firms over time. Consistently with previous studies, it is found that the Law has to be rejected ex-ante, smaller firms tend to grow faster than their larger counterparts. However, a significant convergence toward Gibrat-like behaviour can be detected ex-post. This finding is an indication that m-sel. "cleans" the original popln. of firms. |
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