Processes of firm growth and diversification: theory and evidence

Coad, Alex and Guenther, Christina (2013) Processes of firm growth and diversification: theory and evidence. Working Paper. University of Sussex, Brighton, Sussex.

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In this short research note we investigate the role of diversification in the firm growth process. We build on Penrose's (1959) Theory of the Growth of the Firm to formulate hypotheses about growth of employment, assets, and sales in the years before, during and after a new product introduction. We exploit a new database from the German machine tool industry which boasts a detailed and meaningful definition of diversification. Our exploratory analyses indicate that diversification, in terms of product introductions, is preceded by employment growth. Moreover, we find support that diversification is positively associated with subsequent asset growth, but negatively associated with subsequent employment growth.

Item Type: Reports and working papers (Working Paper)
Additional Information: SWPS 2013-11
Schools and Departments: University of Sussex Business School > SPRU - Science Policy Research Unit > SPRU Working Paper Series
Subjects: H Social Sciences
Depositing User: Jill Kirby
Date Deposited: 16 Jul 2014 13:15
Last Modified: 16 Jul 2014 13:15

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