Firm Growth,Size, Age and Behavior in Japanese Manufacturing

This paper investigates the relationship between firm growth and firm size, firm age and firm behavior, such as R&D activity and subcontracting, based on the data of nearly 14,000 Japanese manufacturing firms. The stylized facts that firm size and age have a negative effect on firm growth are confirmed in the case of Japanese manufacturing firms. Also, a firms survivability rises with its size and age. R&D expenditure per employee has a significant positive effect on firm growth, which justifies the argument made by Hall (1987). Although subcontracting to only one company has no significant effect on firm growth, it has a significant positive effect on a firms survivability. In addition, subcon-tracting firms depending on only one company as a customer are subject to no significant age effects. This possibly suggests that the age effect itself has some relation to the extent of the trade network.     

Knowledge networking and growth in service firms

This paper empirically assesses whether knowledge networking affects the growth of small service firms. More specifically, using a large, unbalanced panel data set for the period 1992–2009, it investigates whether participation in a knowledge network called PLATO is positively related to service firm growth. The results show that knowledge networking has a highly significant positive effect on the net asset and added value growth of service firms. Furthermore, it is demonstrated that the positive effect of knowledge networking on firm growth is significantly larger for service firms than for manufacturing firms, indicating that industry drives networking success.     

Modeling the relationship between networking and firm performance

Network theory suggests that successful business ownership might depend on the ability of owners to gain access to resources not under their control in a cost effective way through networking. To date, however, there has been little empirical support for this proposition, particularly for established firms. The results of this study, based on a large longitudinal database, indicate a significant positive relationship between networking (particularly with formal networks such as external accountants) and both firm survival and, to a lesser extent, growth, but not ROE. Further, network intensity is found to be associated with survival, and network range with growth.     

Exports,firm size,and firm dynamics

This paper explores the relationships between exports, firm size, and firm dynamics. It is based on a unique longitudinal data set collected at the establishment level, covering some 7000 manufacturing German firms. We present stylized facts on exports and firm size, showing that the probability that a firm is an exporter increases with firm size; however, there are many successful exporters among small firms, and non-exporters among larger firms, too, while most of the exports are from the top size groups of firms. An econometric study shows a picture that is consistent with theoretical considerations: The impact of firm size on exports is positive but decreasing, while human capital intensity, domestic market share, and advanced technology all have a positive influence on the export performance of a firm. Firm growth and export performance are positively related, as is expected from a model of a price-discriminating monopolist.     

Firm versus Sector Effects on Profitability and Growth: The Importance of Size and Interaction

In this study we contribute to the long‐standing debate on the impact of firm versus industry effects on firm performance in three distinct ways; firstly by testing the firm, industry and their interaction effects on performance, secondly by examining the impact of each effect for different size groups, and lastly by measuring performance in terms of sales growth in addition to profitability. We use data of 71,750 UK firms, between 2002 and 2004, and employ moderated regression analysis for three sub‐samples namely micro, SMEs and large firms. With regards to profitability, we find the interaction effect to be significant in all sub‐samples for broad level of industrial aggregation (SIC4). For narrow industrial aggregation (SIC2), the interaction effect is only significant for micro firms. Neither of the above effects is significant for sales growth.     

Location and Survival of New Entry

Drawing from two different strands of literature, industrial ecology and spatial analysis, the paper attempts to examine the role that location plays in determining firm survival. A time-varying covariates hazard model is used on Greek firms, which enter manufacturing in the early 1980s and are followed up to 1992. Location in Greater Athens vs. the rest of the country affects survival positively, especially when smaller firms are concerned. Other firm variables such as current size, profitability, leverage and capital together with growth and industry contestability are also found to affect survival, which becomes more difficult for firms established closer to recessions.     

Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth

This paper focuses on certain drivers of SME sales growth related to knowledge and innovation. Building on the dynamic capabilities literature, we test whether two organizational capabilities (external sourcing and employee involvement in renewal activities) predict sales growth, and if so, whether such effects are mediated by process and/or product innovation. Based on survey data from a panel study of Dutch SMEs, and controlling for several firm characteristics (firm size, sector, age and family business), we conclude that external sourcing has direct effects on both product and process innovation, with an indirect effect (mediated by process innovation) on sales growth. In line with our hypothesis development, we also find that employee involvement, while positively affecting process innovation, has a negative effect on sales growth. Firm size moderates the effects of two of the variables (external sourcing and product innovation) on sales growth, with more positive effects found for the smallest firms, results supporting the nimbleness (versus resource-based) view.     

A Comparison of Clustering Dynamics in the British Broadcasting and Financial Services Industries

This paper compares patterns of industrial clustering in the British broadcasting and financial services industries. Recent trends of deregulation, rapid technological change, and globalization in both industries suggest the significant and increasing importance of clustering effects. This study examines the evidence. It investigates the effects of cluster strength on the growth of the firm and on rates of surviving entry. We find positive, large, and statistically significant clustering effects. In both industries: (a) incumbent firms located in a cluster that is strong in their own sub-sector of their industry tend to grow faster than average; and, (b) new firms are attracted by industry strength in certain sub-sectors in a particular region. The results for these largely mature service industries are very similar to those observed in earlier studies that have examined clustering patterns in newer high technology manufacturing industries.     

The Creation and Growth of Small Business Service Firms in Post-Industrial Britain

Since 1980, the United Kingdom has experienced a dramatic growth in firms and employment in information-intensive business services, such as management consultancy and market research. This article reports the results of the first substantial nation-wide investigation into the nature and causes of small professional business service firm growth in Britain, undertaken in 1991. It reveals marked differences in the characteristics, markets and competitive requirements of such firms, compared with small manufacturing firms. The demand for their services comes predominantly from large companies, and is more focussed on financial and other services and government. But small firms are also making increasing use of business services. Specialised expertise, reputation and educational and professional qualifications are essential prerequisites for the establishment of new business service firms. Their success is also being enhanced by increasing use of informal networking, collaborative partnerships, and subcontracting.     

A Panel Study of Firm Growth among SMEs in Networks

An underlying assumption in SME literature, as well as among policymakers, is that networks are good per se especially for SMEs. Through accessing and utilising external resources in the network, the SME can overcome some of the assumed disadvantages of limited size. Thus networking is assumed to enhance small firm performance and thereby small firm growth. This article investigates this assumption. Analysis of panel data ascertains that a substantial number of SMEs are actively networking and that the level of networking has been maintained over a five-year period. In spite of this there is no evidence of associated short-term benefits such as growth in employment or growth in total sales resulting from the networking activities. The analyses suggest, however, that networking is associated with high growth in the geographic extension of markets, which suggests that networking sustains long-term objectives of the firms.     

Firm growth during infancy

In this paper, we study the post-entry patterns of survival and growth of firms established in Portuguese manufacturing in 1983. Our data suggest the existence of a highly turbulent economy, with a very large number of small firms being created, but a great proportion of new firms disappearing in the first years subsequent to their birth. Survivors, however, grow quite fast and we found that small firms grow faster than their larger counterparts. Moreover, we found that the growth decision of firms is affected by a firm specific component, which is also correlated with firm size. These two effects are oppositely signed and, therefore, estimates that fail to take this firm specific effect into account are likely to be strongly biased towards zero.     

Social Media Usage by Law Firms: Correlation to Revenue,Reputation, and Practice Areas

Social media can be used for multiple purposes within the legal profession, such as client development, networking, disseminating information, and building awareness of the firm and its practices. This study found that the more social media platforms a firm uses, the higher its ranking among prestigious law firms. Based on the practices of successful law firms, it is recommended that lawyers maintain LinkedIn and Twitter accounts as a way to connect with clients and the public. Findings indicate that additional platforms are beneficial, based on the practice areas of a firm. Guidelines are provided for composing effective social media messages.     

CEO tenure and ownership mode choice of Chinese firms: The moderating roles of managerial discretion

Based on upper echelon theory, this study has explored how CEO tenure affects ownership mode choice of Chinese firms investing abroad, and how some organizational factors, such as firm size, firm age and CEO duality, moderate this relationship. Using secondary data, this study finds CEO tenure has a positive relationship with the choice of full control mode, CEO duality can reinforce this relationship, but firm size and firm age have no significant moderating effect.     

Japanese subcontracting at a crossroads

This paper examines the economic role of small business in Japan in the classic model of subcontracting vis-à-vis the novel model of networking. The Japanese economy can be characterized by an extensive system of subcontracting. There is an intensively elaborated point of focus on this Japanese approach to the technological and managerial aspects of subcontracting outside of Japan. Small and medium sized enterprises and big enterprises, in their endeavour to be effective and efficient, determine the characteristics of this system of industrial production. The characteristics of the subcontracting system in Japan are undergoing structural changes. The requirements concerning an accelerating technological expertise and marketing know-how of subcontracting firms will be adduced as a motive for the rapid industrial restructuring.     

Age or size? Contributions to job creation

Small firms have been identified as drivers of job creation, although the evidence on their contribution to net employment growth has been disputed. This article shows that job turnover and firm growth vary systematically across firm size groups and that smaller firms do indeed make an important contribution to new job creation. There is a significant caveat, however; we find that it is not firm size per se that is driving these results but rather firm age. We show that younger firms are consistently more dynamic than older firms. We also find a strong inverse relationship between employment growth and size for young firms, but this declines very markedly for older age groups. This provides some support for the Gibrat’s law prediction that size and growth are independent, but only once the firm has moved beyond the start-up stage.     

Job Creation by Company Size Class: The Magnitude,Concentration and Persistence of Job Gains and Losses in Canada

The statistical observation that small firms have created the majority of new jobs during the 1980s has had a tremendous influence on public policy. Governments have looked to the small firm sector for employment growth, and have promoted policies to augment this expansion. However, recent research in the U.S. suggests that net job creation in the manufacturing small firm sector may have been overestimated, relative to that in large firms.The first part of this paper addresses various measurement issues raised in the recent research, reassess the issue of job creation by firm size, and pushes this work beyond the manufacturing sector by employing longitudinal data covering all companies in the Canadian economy. We conclude that over the 1978–92 period, as a group small firms did account for a disproportionate share of both gross job gains and losses, and net employment increases, no matter which method of sizing firms is used. Measurement does matter, however, as the magnitude of the difference in the growth rates between small and large firms is very sensitive to the measurement approaches used. Part one of the paper also produces results for various industrial sectors, and examines employment growth in existing small and large firms (i.e., excluding births). It is found that employment growth in the population of existing small and large firms is very similar. Attempts are made to introduce a job quality aspect to the analysis by using payroll rather than employment data. Payroll data allow any relative change in hours worked or wages paid in small (relative to large) companies to be incorporated in the findings. This did not significantly alter the conclusions reached using employment data only.The second part of the paper looks at concentration and persistence of employment creation and destruction within size classes. If growth is highly concentrated, knowing that a firm is small will provide little information about its prospects for growth. Most small firms would grow relatively little, or decline, while a few expanded a lot. It is found that both job creation and destruction is highly concentrated among relatively few firms in all size groups. There are fast growing firms in all size classes, and although most job creation is found in the small firm sector, the fastest growing large firms out-perform the majority of small firms in any given period. Finally, the employment creation performance of businesses are compared over two three-year periods. It is found that knowing that a firm is a high performer (in terms of jobs created) over one period is of only limited value in determining growth in the second period. This is particularly true among small firms. These results suggest that firms which expand rapidly during one period are replaced to some considerable degree by others in the subsequent period.     

Empirical Analysis of Business Growth Factors Using Swedish Data

Empirical research conducted on the U.S., German, Australian, and Scottish economies has shown that age, size, location, legal form, and industry are related to business growth. Much of this research has focused on manufacturing firms, thus providing little information about the effect of industrial sector differences on these factors. We seek to both confirm that small independent firms demonstrate the greatest growth rates and to explore the effects of the industrial sector on this conclusion.
This article uses Swedish data to replicate previous research while using a different definition of business to enhance the study of effects from industry, international versus domestic businesses, and domestic versus foreign ownership. Results show that business age, beginning size, ownership form, industrial sector, and legal form are the most important factors related to growth. Although business growth differs among industrial sectors, youth, ownership independence, and small size are major factors that underlie growth across all industries.     

Market delimitation,firm survival and growth in service industries

This article focuses on the effect of both firm survival and market delimitation on stochastic growth behaviour in the realm of service industries. Two samples of firms were selected for the study, one of them representing the surviving firm population in the tourism industry and the other one representing the firm total. The activity of firms was used for measuring the influence of market delimitation. Stochastic growth behaviour is found to hold for the sector as a whole, whereas it does not do so for the population of surviving firms. Market delimitation is also observed to influence growth behaviour, but only when combined with firm survival.     

Age and firm growth: evidence from three European countries

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.     

Networks,Firm Size and Innovation

Using survey data on Australian firms this paper investigates the determinants of innovation. Various possible determinants are investigated, including market structure, export status, the use of networks, and training. Regression analysis is conducted separately for manufacturing and non-manufacturing firms and, within each sector, by firm size categories. The results include evidence of persistence in innovative activities and that the use of networks is associated with innovation in some sector-firm size categories. Specifically, small manufacturing firms exhibit a positive association between networking and innovation. In contrast, for non-manufacturing firms this association is present for medium and large sized firms.