ABSTRACT
The relationship between firm growth, size and age has been widely analysed both from a theoretical and empirical point of view (Gibrat, 1931; Jovanovic, 1982). In particular, Gibrat's Law suggests that the probability of a proportionate increase in firm size over an interval of time is the same for all firms, regardless of their initial size. However, the majority of empirical evidence shows an inverse growth—size relationship which is inconsistent with this theory (Evans, 1987). The age—growth relationship is based on theories that predict a particular pattern of growth over the life cycle of the firm and in particular that growth decreases with firm age (Jovanovic, 1982). However, the empirical literature indicates that other firm characteristics may play an important role in explaining the growth of firms, such as capital structure (Lang et al., 1996), firm structure (Variyam and Kraybill, 1991), research and development (Hall, 1987), human capital (Rauch et al., 2005) and export activities (Liu et al., 1999).
