Sources of Firm Life-Cycle Dynamics: Size vs. Age Effects

37 Pages Posted: 18 Oct 2014 Last revised: 6 Jan 2017

Lorenz Kueng

Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

Mu-Jeung Yang

University of Washington - Department of Economics

Bryan Hong

University of Western Ontario - Richard Ivey School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 5, 2017

Abstract

What determines the life-cycle of businesses? Exploiting unique firm-level panel data on internal organization and innovation we establish three key sets of stylized facts to inform recent theories of firm life-cycles. First, life-cycle effects are driven by startups, not by new establishments of existing firms. Second, organizational restructuring and innovation are both strongly correlated with firm growth but not with firm age, in contrast to passive learning theories of firm dynamics. Third, there are important sectoral differences in innovation activities which are monotonically increasing in firm size for manufacturing firms but hump-shaped for firms in service industries.

Keywords: firm life-cycle, organizational capital, innovation

Suggested Citation

Kueng, Lorenz and Yang, Mu-Jeung and Hong, Bryan, Sources of Firm Life-Cycle Dynamics: Size vs. Age Effects (January 5, 2017). Available at SSRN: https://ssrn.com/abstract=2511069 or http://dx.doi.org/10.2139/ssrn.2511069

Lorenz Kueng (Contact Author)

Northwestern University - Kellogg School of Management ( email )

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National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Mu-Jeung Yang

University of Washington - Department of Economics ( email )

Box 353330
Seattle, WA 98195-3330
United States

Bryan Hong

University of Western Ontario - Richard Ivey School of Business ( email )

1255 Western Rd
London, Ontario N6G 0N1
Canada

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