Business & Entrepreneurship Journal

The Drivers of Firm Growth: Firm Size Effect

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  • Abstract

     

    This paper discusses an important economic problem which is why and how firms grow and argues that firm size is one of the leading contributors to firm growth discrepancy. We demonstrate the importance of firm size through the analysis of 40 years of Compustat individual firm level data. Our results indicate that despite many business advantages large firms have, smaller firms in the same industry still find their edges in growing their business.

     

    JEL classification numbers: B410, C020, C180, C510, C520, C550, L110, L250.

    Keywords: Firm strategy, Firm growth, Firm size, Firm size distribution, Gibrat's law.