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Processes of firm growth and diversification: theory and evidence

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posted on 2023-06-08, 17:50 authored by Alex Coad, Christina Guenther
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.

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Publication status

  • Published

File Version

  • Published version

Publisher

University of Sussex

Place of publication

Brighton, Sussex

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Notes

SWPS 2013-11

Institution

University of Sussex

Full text available

  • Yes

Legacy Posted Date

2014-07-16

First Open Access (FOA) Date

2016-03-22

First Compliant Deposit (FCD) Date

2016-03-22

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