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Innovation and corporate dynamics: a theoretical framework

Growiec, Jakub and Pammolli, Fabio and Riccaboni, Massimo Innovation and corporate dynamics: a theoretical framework. Working Paper # /2011 (Unpublished)

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We provide a detailed analysis of a generalized proportional growth model (GPGM) of innovation and corporate dynamics that encompasses the Gibrat’s Law of Proportionate Effect and the Simon growth process as particular instances. The predictions of the model are derived in terms of (i) firm size distribution, (ii) the distribution of firm growth rates, and (iii-iv) the relationships between firm size and the mean and variance of firm growth rates. We test the model against data from the worldwide pharmaceutical industry and find its predictions to be in good agreement with empirical evidence on all four dimensions.

Item Type: Working Paper (Working Paper)
Uncontrolled Keywords: Business firm size; firm growth distribution; Gibrat’s Law; Pareto distribution; lognormal distribution, size-variance relationship
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Q Science > QA Mathematics
Research Area: Economics and Institutional Change
Depositing User: Ms T. Iannizzi
Date Deposited: 07 Sep 2011 12:58
Last Modified: 24 Jan 2014 14:19
URI: http://eprints.imtlucca.it/id/eprint/825

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