Age and firm growth: evidence from three European countries
- 1.2k Downloads
This article provides new insights into the dependence of firm growth on age along the entire distribution of growth rates, and conditional on survival. Using data from the European firms in a global economy survey, and adopting a quantile regression approach, we uncover evidence for a sample of French, Italian and Spanish manufacturing firms with more than ten employees in the period from 2001 to 2008. We find that: (1) young firms grow faster than old firms, especially in the highest growth quantiles; (2) young firms face the same probability of declining as their older counterparts; (3) results are robust to the inclusion of other firms’ characteristics such as labor productivity, capital intensity and the financial structure; (4) high growth is associated with younger chief executive officers and other attributes that capture the attitude of the firm toward growth and change. The effect of age on firm growth is rather similar across countries.
KeywordsFirm growth Age Quantile regression
JEL ClassificationsL21 L25 L26 L60
The authors wish to thank two anonymous referees for their useful remarks. Comments from Agustí Segarra, Mercedes Teruel and participants at seminars and conferences in Castellón (January 2012), Valencia (Dpto. de Economia Aplicada II, April 2012; IVIE, October 2012), A Coruña (XV Encuentros de Economía Aplicada, June 2012), Tarragona (Workshop on Firm Growth and Innovation, June 2012) and Palma de Mallorca (March 2013) are also greatly appreciated. The usual disclaimer applies. Fabio Pieri greatly acknowledges the financial support of the Spanish Ministry of Science and Innovation (project MINECO ECO2011-27619 co-financed with FEDER). This article was completed within the EFIGE project (contract no. 225551) funded by the European Commission under the Seventh Framework Programme.
- Arrighetti, A., & Ninni, A. (2009). Firm size and growth opportunities: A survey. Working paper 05/2009, Department of Economics, University of Parma, Parma.Google Scholar
- Barba Navaretti, G., Castellani, D., & Pieri, F. (2013). Age and firm growth. Evidence from three European countries. CIRCLE EWP.Google Scholar
- Bravo-Biosca, A. (2011). A look at business growth and contraction in Europe. NESTA Working Paper No. 11/02, London.Google Scholar
- Coad, A. (2007b). Firm growth: A survey, papers on economics and evolution, 0703. Jena: Max Planck Institute of Economics.Google Scholar
- Coad, A. (2010). Investigating the exponential age distribution of firms. Economics the Open Access Open Assessment E Journal 4, 2010-17 doi:http://dx.doi.org/10.5018/economics-ejournal.ja.2010-17.
- Coad, A., & Tamvada, J. P. (2008). The growth and decline of small firms in developing countries, papers on economics and evolution, 0808. Jena: Max Planck Institute of Economics.Google Scholar
- Fizaine, F. (1968). Analyse statistique de la croissance des entreprises selon l’âge et la taille. Revue d’Economie Politique, 78, 606–620.Google Scholar
- Haltiwanger, J. C., Jarmin, R. S., & Miranda, J. (2010). Who creates jobs? Small VS. large VS. Young. NBER Working Paper no. 16300, Cambridge, MA.Google Scholar
- Lee, N. (2011). Free to grow? Assessing the barriers faced by actual and potential high growth firms. NESTA Working Paper No. 11/01, London.Google Scholar
- Nelson, R., & Winter, S. (1982). An evolutionary theory of economic change. Cambridge, MA: Harvard University Press.Google Scholar
- Penrose, E. T. (1959). The theory of the growth of the firm. Oxford: Oxford University Press.Google Scholar
- Stenholm, P., & Toivonen, J. (2009). The attributes of firm growth—why and why not a firm does grow. Frontiers of Entrepreneurship Research, 29, 1–15.Google Scholar