Reconciling quantile autoregressions of firm size and variance–size scaling

The aim of this paper is to understand what economic mechanisms may cause the Law of Proportionate Effect to break down for fast-growing and shrinking firms. Recent evidence has highlighted that the first-order coefficients of quantile auto-regression of firm size decline across quantiles. Our theoretical results show that negative variance–size scaling is sufficient to yield a decline in quantile auto-regression coefficients if firm log-size is Laplace-distributed, conditional on size one period ahead. However, it is sufficient only for declining auto-regression coefficients for fast-growing firms under Asymmetric Laplace conditional log-size if skewness is decreasing with size. In other words, if the growth of large firms is less dispersed and more left-skewed, size is a disadvantage for the growth of fast-growers, but not necessarily an advantage for fast-decliners. Thus, size-related determinants of negative growth skewness, such as diseconomies of growth, market power, and managerial attention issues, impact on how the LPE is violated. Using data on Dutch manufacturing companies from the Business Register of Enterprises observed between 1994 and 2004, our empirical estimates of quantile regression models confirm the evidence of declining quantile regression coefficients for small–medium firms (20–199 employees) mainly in the right-most quantiles, and for the same subsample, we find that growth rates variance and skewness are decreasing with size. The theoretical propositions of the paper are thus corroborated.     

The earliness of exporting and creeping sclerosis? The moderating effects of firm age,size and centralization

By using a sample of 644 manufacturing firms in four EU countries and five regions, we investigate the earliness/exporting relationship. Firstly, we examine the firm’s ability to retain LAN over time as it gets older and bigger. Secondly, we examine the role played by the firm’s decision-making structure. Our results reveal that exporting sclerosis does set in, as age and size of the firm significantly and negatively affect the earliness/exporting relationship. In addition, however, we find that centralization plays a role in the sclerotic effects of size (though only weakly for age), exacerbating their moderating effects on the earliness/exporting relationship. Our study claims to contribute to internationalization research by advancing the idea that LAN is not path-dependent but subject to liabilities. Beyond age and size, we add the more nuanced “liability of centralization” to boundary conditions for retaining LAN. Theoretical and managerial implications emerge.     

Firm size,firm growth,and persistence of chance: Testing GIBRAT's law with establishment data from Lower Saxony, 1978–1989

Using data for some 7000 manufacturing establishments from Lower Saxony for 1978–1989 we tested for the validity of GIBRAT's Law of Proportionate Growth. We found that the law is only valid for very few groups of firms in some of the periods covered. However, we did not find that small firms grew systematically faster or slower than larger firms, or vice versa. On the other hand, we found persistence of chance in the sense that a firm grows faster if it happened to grow faster in the past, too.This paper is part of the research project Production, Employment Growth, and Exports by Lower Saxonian Firms. The computations based on the establishment level data from the official surveys of the manufacturing sector were made possible by a special arrangement between the Ministry of Economics, the Statistical Office, and the Labour Research Group at the Department of Economics, Hannover University. I am grateful to Uwe Rode for preparing the data base, to Wihelm Lorenz for writing a program that makes it possible to use these large data set on a PC, and to an unknown referee for helpful comments on an earlier version of this paper.     

Is Firm Productivity Related to Size and Age? The Case of Large Australian Firms

We investigate the relationship between productivity, size and age of large Australian firms employing more than 100 employees or holding assets in excess of $100 million. In addition, we also investigate the extent of productivity persistence among these firms by looking at transition matrices of productivity distribution and productivity-rank mobility. The empirical study is based on the IBISWorld database used to estimate translog cost function to measure (a residual based) productivity. We find evidence, though somewhat weak, that larger and older firms are on average less productive. Further, we find strong evidence for a high degree of inertia in terms of productivity ranking within an industry.     

CEOs’ regulatory focus and firm internationalization: The moderating effects of CEO overconfidence,narcissism and career horizon

While the international business literature has mainly focused on the firm- or industry-level antecedents of internationalization strategies, scholars have recently advocated a greater focus on the microfoundations of firms’ strategic decisions. Building on the regulatory focus theory, this study focuses on how CEO promotion and prevention foci impact firm internationalization. Looking into dispositional and situational attributions, this study also theorizes how these factors moderate the relationship between a CEO’s psychological motivations and firm internationalization. Using data from publicly traded US firms listed in the Fortune 500, the findings of this study show that a CEO’s promotion focus is positively associated with the extent of a firm’s internationalization, whereas a CEO’s strong prevention focus limits the extent of a firm’s internationalization. The findings also reveal that the relationship between a CEO’s regulatory focus and the extent of a firm’s internationalization is moderated by a CEO’s overconfidence, narcissism, and career horizon. These findings have important research and managerial implications for firms engaged in international business.     

Entrepreneurship and dynamic capabilities: how firm age and size affect the ‘capability enhancement–SME performance’ relationship

The entrepreneurship and dynamic capabilities literature adds to our understanding of how strategic change can drive firm performance. We draw on a recent survey of US SMEs to determine whether entrepreneurial ventures have dynamic capabilities, and, if so, whether differences in the characteristics of those ventures lead to differences in how dynamic capabilities benefit firm performance. We find that most entrepreneurial ventures report having such capabilities and that their differences in age and size lead to differences in how dynamic capabilities affect firm performance. We consider how these results redefine the overlap of the dynamic capabilities view literature with the entrepreneurship literature, because the redeployment of resources to create and adapt to opportunities that defines what are dynamic capabilities lies at the core of what is entrepreneurial activity.     

Family firm,health resort and industrial colony: The grand hotel and mineral springs at Mondariz Balneario,Spain, 1873–1932

There is a considerable literature on histories of family businesses, but very little dealing with the tourism and hospitality sector, despite growing recognition of its importance. This case study of a Spanish mineral springs resort between the 1870s and the 1930s sets the trajectory of Mondariz Balneario, Galicia, a family-run spa hotel with an elite clientele, in national and international context. It seeks to explain the resort's inter-generational success in terms of amenity, paternalism, imaginative publicity and networking, and a conscious quest for what would later be called sustainability, with added ingredients of Galician cultural patriotism and integration into the wider regional economy.     

Exclusion of women and organisational characteristics: Swedish mutual health insurance 1901–1910

Abstract

Mutual societies have been recognised for their ability to mitigate information asymmetry. Although successful in reducing sickness claims, the exclusion of women was common. Health insurance societies argued the exclusion was a means to reduce adverse selection and moral hazard since women were regarded as higher risk. In this paper, we explore differences in organisational characteristics between societies that excluded and societies that did not exclude women as members between 1901 to 1910. Based on panel data, the study shows that societies that excluded women were less successful in keeping down sickness claims, in relation to benefits, than gender-mixed societies.     

International couture: The opportunities and challenges of expansion, 1880–1920

This paper explores the topic of the expansion of the haute couture businesses in the late nineteenth and early twentieth centuries across international frontiers. Concentrating on the period before and during World War I and on the couture houses of Worth, Paquin, Drecoll, Redfern, Boué Soeurs and Lucile, it argues that international expansion was accompanied by the rapid development of innovative marketing and promotional practices, but hampered by obstacles that were ultimately impossible to overcome.     

Robustness of size and value effects in emerging equity markets, 1985–2000

We examine the robustness of size and book-to-market effects in 35 emerging equity markets during 1985–2000. Mean returns for high book-to-market firms significantly exceed mean returns for low book-to-market firms. These findings are robust to tests that control for size effects and that remove extreme returns. Similarly, mean returns for small firms exceed mean returns for large firms. But, the firm size results lack robustness to the removal of extreme returns. Moreover, significant size effects are found in tests that define firm size relative to the local market average, but generally are not found in tests that use absolute firm size. Our findings are confirmed by cross-sectional regressions that control for systematic risk at the global and local levels.     

British overseas retailing, 1900–60: International firm characteristics,market selections and entry modes

We examine the historical developments of the environmental adaptation process at one Swedish metal smelting firm, contrasting the result with cases in Canada. The findings suggest that the Swedish system in excluding stakeholders, focusing on plant emissions and stipulating pollution reduction at economically feasible costs mitigated risk which resulted in long-term contracts in a cooperative framework in which engineers were given a high degree of discretion. This enabled an ‘expansion-for-emission-reduction’ strategy which is consistent with the so-called Porter and van der Linde hypothesis. Moreover, the findings suggest that environmental management systems should be considered in the Environmental Kuznets Curve (EKC) research.     

Multinational corporations,totalitarian regimes and economic nationalism: United Fruit Company in Central America, 1899–1975

The US multinational United Fruit Company has been considered the quintessential representative of American imperialism in Central America. Not only did the company enjoy enormous privileges in that region, but also counted on authoritarian governments in dealing with labour unrest. The literature assumes that United Fruit and the dictators were natural allies due to their opposition to organised unionism. This paper shows that this alliance could only survive as long as the multinational provided the dictators with economic stability for the country. However, when the multinational proved to be incapable of doing that, the dictators allied with the working class to confront the multinational and extract higher rents from it.     

The entrepreneur–environment nexus: Uncertainty,innovation, and allocation

We build upon a recent stream of research that has proposed entrepreneurship as a solution to, rather than a cause of, environmental degradation. Our proposition is that under certain conditions entrepreneurs are likely to supplement, or surpass, the efforts of governments, NGOs and existing firms to achieve environmental sustainability. Entrepreneurs can contribute to solving environmental problems through helping extant institutions in achieving their goals and by creating new, more environmentally sustainable products, services and institutions. Our model illustrates how entrepreneurs 1) address environmental uncertainty, 2) provide innovation and 3) engage in resource allocation to address environmental degradation.