Non-continuous growth of firms: some empirical evidence from Italian manufacturing industry

Firms change their size through a row of discrete leaps. A basic model allowing for discontinuous growth can be based on several assumptions that entail testable consequences: profitability is not a continuous function of the firms' size, but exhibits peaks, each corresponding to a locally opti...

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Bibliographic Details
Published in:Industry and innovation 2019-01, Vol.26 (1), p.78-99
Main Authors: D’Elia, Enrico, Nascia, Leopoldo, Zeli, Alessandro
Format: Article
Language:English
Subjects:
Companies
Continuity (mathematics)
Empirical analysis
Manufacturing
Model testing
Nonparametric statistics
Parametric analysis
Profitability
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Summary:Firms change their size through a row of discrete leaps. A basic model allowing for discontinuous growth can be based on several assumptions that entail testable consequences: profitability is not a continuous function of the firms' size, but exhibits peaks, each corresponding to a locally optimal size. The model has been tested by using a panel of Italian manufacturing firms. Both the non-parametric analysis and a panel estimation confirm the presence of 'peaks' in the distribution of profitability by size.
ISSN:1366-2716
1469-8390
DOI:10.1080/13662716.2017.1374167