A Survey of Theories and Empirical Evidence
New Perspectives on the Modern Corporation series
Chapter 1: Introduction
Research into firm growth has been accumulating at a terrific pace, and is being published in a growing range of outlets, such as journals relating to the disciplines of economics, management, sociology, entrepreneurship, as well as disciplines as diverse as statistical physics and psychology. The past few decades have witnessed much progress in empirical research into firm growth, in particular, for a number of reasons. First, datasets documenting economic phenomena are growing in terms of their level of detail, sample size and availability. The rise of information technology has played a major role in this trend. Many countries have statistical offices that undertake censuses of business firms and establishments, creating longitudinal databases that track individual firms over time, and make these records available to researchers (under restrictions of confidentiality, of course). Firms are required to provide information on themselves and their operations at a level of detail that is quite remarkable. For example, many firms are required to file financial reports that describe their operations not just at the aggregated level, but disaggregated by production plant or by line of business. Even ‘soft’ variables, such as entrepreneurial growth aspirations, are becoming commonplace in quantitative statistical analyses – these variables can be measured using subjective responses of individuals to largescale questionnaires. A second development favouring empirical research into economics is that econometric techniques have kept pace with the availability of increasingly informative datasets. Modern econometric work is able to deal with such complicated issues of endogeneity, unobserved heterogeneity within individuals, and sample...