Firm growth, size, age and behavior in Japanese manufacturing

Abstract

This paper investigates the relationship between firm growth and firm size firm age and firm behavior such as R&D activity and subcontracting based on the data of nearly 14000 Japanese manufacturing firms. "The stylized facts" that firm size and age have a negative effect on firm growth are confirmed in the case of Japanese manufacturing firms. Also a firm's survivability rises with its size and age. R&D expenditure per employee has a significant positive effect on firm growth which justifies the argument made by Hall (1987). Although subcontracting to only one company has no significant effect on firm growth it has a significant positive effect on a firm's survivability. In addition subcon-tracting firms depending on only one company as a customer are subject to no significant age effects. This possibly suggests that the age effect itself has some relation to the extent of the trade network. © 2005 Springer Science + Business Media Inc.