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Department of Economics, Aarhus School of Business, University of Aarhus Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus

No 06-3:
The Growth Opportunities for SMEs?

Jan Bentzen (), Erik StrÝjer Madsen () and Valdemar Smith ()

Abstract: The extensive empirical literature on the validity of Gibratís law does not in general verify the law as it finds that firmsí growth rates are negatively correlated with both firm size and age. However, some studies find that Gibratís law holds for sub-samples of firms such as large firms or firms belonging to special industries. It has been pointed out that these results are due to the fact that the likelihood of firm survival for natural reasons is positively related to firm size and age. This study uses a relatively large and representative sample of Danish firms to evaluate the validity of Gibratís law for different kinds of firms over the period 1990 - 2003. In contrast to the majority of earlier studies our analysis corrects for the bias in the estimations by using variables related to the survival of small firms.

Keywords: Market Structure; Firm Strategy; Market Performance; (follow links to similar papers)

JEL-Codes: L10; (follow links to similar papers)

23 pages, September 27, 2006

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