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.