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Firm Growth: A Survey by Alexander Coad

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Max Planck Institute of Economics
Evolutionary Economics Group
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Firm Growth: A Survey∗
Alex Coad

a b c†

a Max Planck Institute of Economics, Jena, Germany b Centre d’Economie de la Sorbonne,

Equipe MATISSE, Univ. Paris 1 – CNRS

c LEM, Sant’Anna School of Advanced Studies, Pisa, Italy
May 14, 2007

Abstract
We survey the phenomenon of the growth of firms drawing on literature from economics, management, and sociology. We begin with a review of empirical ‘stylised facts’ before discussing theoretical contributions. Firm growth is characterized by a predominant stochastic element, making it difficult to predict. Indeed, previous empirical research into the determinants of firm growth has had a limited success. We also observe that theoretical propositions concerning the growth of firms are often amiss. We conclude that progress in this area requires solid empirical work, perhaps making use of novel statistical techniques.

JEL codes: L25, L11
Keywords: Firm Growth, Size Distribution, Growth Rates Distribution, Gibrat’s Law,
Theory of the Firm, Diversification, ‘Stages of Growth’ models.

∗

I thank Giulio Bottazzi, Giovanni Dosi, Hafida El-Younsi, Jacques Mairesse, Bernard Paulr´, Rekha Rao, e Angelo Secchi and Ulrich Witt for helpful comments. Nevertheless, I am solely responsible for any errors or confusion that may remain. This version: May 2007
†
Corresponding Author : Alex Coad, Max Planck Institute of Economics, Evolutionary Economics Group,
Kahlaische Strasse 10, D-07745 Jena, Germany. Phone: [phone]. Fax : [phone]. E-mail : [e-mail] 1

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Contents
1 Introduction

3

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