Papers Containing Keywords(s): 'larger firms'
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Viewing papers 11 through 18 of 18
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Working PaperWho Creates Jobs? Small vs. Large vs. Young
August 2010
Working Paper Number:
CES-10-17
There's been a long, sometimes heated, debate on the role of firm size in employment growth. Despite skepticism in the academic community, the notion that growth is negatively related to firm size remains appealing to policymakers and small business advocates. The widespread and repeated claim from this community is that most new jobs are created by small businesses. Using data from the Census Bureau Business Dynamics Statistics and Longitudinal Business Database, we explore the many issues regarding the role of firm size and growth that have been at the core of this ongoing debate (such as the role of regression to the mean). We find that the relationship between firm size and employment growth is sensitive to these issues. However, our main finding is that once we control for firm age there is no systematic relationship between firm size and growth. Our findings highlight the important role of business startups and young businesses in U.S. job creation. Business startups contribute substantially to both gross and net job creation. In addition, we find an 'up or out' dynamic of young firms. These findings imply that it is critical to control for and understand the role of firm age in explaining U.S. job creation.View Full Paper PDF
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Working PaperInformation Technology, Capabilities and Asset Ownership: Evidence from Taxicab Fleets
November 2009
Working Paper Number:
CES-09-39
We examine how information technology (IT) influences asset ownership through its impact on firms' and agents' capabilities. In particular, we propose that when IT is a substitute for agents' industry-specific human capital, IT adoption leads to increased vertical integration. We test this prediction using micro data on vehicle ownership patterns from the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms. The empirical tests exploit exogenous variation in local market conditions, to identify the impact of dispatching technology on firm asset ownership. The results show that firms increase the proportion of taxicabs owned by 12% when they adopt new computerized dispatching systems. The findings suggest that firms increasingly vertically integrate when they acquire resources that substitute for their agents' capabilities.View Full Paper PDF
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Working PaperThe Dynamics of Market Structure and Market Size in Two Health Services Industries
October 2007
Working Paper Number:
CES-07-26
The relationship between the size of a market and the competitiveness of the market has been of long-standing interest to IO economists. Empirical studies have used the relationship between the size of the geographic market and both the number of firms in the market and the average sales of the firms to draw inferences about the degree of competition in the market. This paper extends this framework to incorporate the analysis of entry and exit flows. A key implication of recent entry and exit models is that current market structure will likely depend upon history of past participation. The paper explores these issues empirically by examining producer dynamics for two health service industries, dentistry and chiropractic services. We find that the number of potential entrants and past number of incumbent firms are correlated with current market structure. The empirical results also show that as market size increases the number of firms rises less than proportionately, firm size increases, and average productivity increases. However, the magnitude of the correlations are sensitive to the inclusion of the market history variables.View Full Paper PDF
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Working PaperAgglomeration, Enterprise Size, and Productivity
August 2004
Working Paper Number:
CES-04-15
Much research on agglomeration economies, and particularly recent work that builds on Marshall's concept of the industrial district, postulates that benefits derived from proximity between businesses are strongest for small enterprises (Humphrey 1995, Sweeney and Feser 1998). With internal economies a function of the shape of the average cost curve and level of production, and external economies in shifts of that curve, a small firm enjoying external economies characteristic of industrial districts (or complexes or simply urbanized areas) may face the same average costs as the larger firm producing a higher volume of output (Oughton and Whittam 1997; Carlsson 1996; Humphrey 1995). Thus we observe the seeming paradox of large firms that enjoy internal economies of scale co-existing with smaller enterprises that should, by all accounts, be operating below minimum efficient scale. With the Birch-inspired debate on the relative job- and innovation-generating capacity of small and large firms abating (Ettlinger 1997), research on the small firm sector has shifted to an examination of the business strategies and sources of competitiveness of small enterprises (e.g., Pratten 1991, Nooteboom 1993). Technological external scale economies are a key feature of this research (Oughton and Whittam 1997).View Full Paper PDF
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Working PaperJob Flow Dynamics in the Service Sector
November 1999
Working Paper Number:
CES-99-14
This paper uses the new comprehensive Longitudinal Establishment and Enterprise Microdata at CES to investigate gross and net job flows for 1990 to 1995 for all establishments in the service sector. After examining the recent shifts in the distribution of employment in non-financial services, from single unit firms to multi-unit firms, and from smaller firms to larger ones, we calculate five year gross and net job flow rates for these various types of establishments. This shows that the increasing share of service employment in large firms is not due to higher growth in larger firms. Seeking the dynamics behind the shift of employment to larger firms, we investigate how job flow rates are related to firm and establishment size, using alternative size classification methods. Gross job flow rates vary inversely with the age of establishments in services, as do net growth rates of surviving establishments, even after controlling for size. To help distinguish among the effects of age, firm size, and establishment size on gross and net job flows in services, multivariate regression analysis is used. We find that all gross job flow rates decline with increasing age of establishments when size and industry differences are controlled. Because the job destruction rate falls faster than the creation rate as age increases, net growth rates increase with age for services as a whole. Gross and net job creation also declines with increasing size of establishments, but destruction rates increase with size when controlling for age and industry differences. Firm size differences contribute little or nothing additional when we control for establishment size and age.View Full Paper PDF
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Working PaperRegulation and Firm Size, Foreign-Based Company Market Presence, Merger Choice In The U.S. Pesticide Industry
June 1994
Working Paper Number:
CES-94-06
This paper uses Two-Stage Least Squares to examine the impact of pesticide product regulation on the number of firms and the foreign-based company market share of U.S. Pesticide Companies. It also investigates merger choice with a multinomial logit model. The principal finding is that greater research and regulatory costs affected small innovative pesticide companies more than large ones and encouraged foreign company expansion in the U.S. pesticide market. It was also found that the stage of the industry growth cycle and farm sector demand influenced the number of innovative companies and foreign-based company market share. Finally, firms that remain in the industry were found to have greater price cost margins, lower regulatory penalties costs, and a much greater multinational business presence than those that departed.View Full Paper PDF
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Working PaperReturns to Scale in Small and Large U.S. Manufacturing Establishments
September 1990
Working Paper Number:
CES-90-11
The objective of this study is to assess the possibility of differences in the production technologies between large and small establishments in five selected 4-digit SIC manufacturing industries. We particularly focus on estimating returns to scale and then make interferences regarding the efficiency of small businesses relative to large businesses. Using cross-section data for two census years, 1977 and 1982, we estimate a transcendental logarithmic (translog) production model that provides direct estimates of economies of scale parameters for both small and large establishments. Our primary findings are: (i) there are significant differences in the production technologies between small and large establishments; and (ii) based on the scale parameter estimates, small establishments appear to be as efficient as large establishments under normal economic conditions, suggesting that large size is not a necessary condition for efficient production. However, small establishments seem to be unable to maintain constant returns to scale production during economic recession such as that in 1982.View Full Paper PDF
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Working PaperAn Analysis of Small Business Size and Rate of Discontinuance
January 1990
Working Paper Number:
CES-90-02
This study investigates small business failure rates in relation to several measures of firm size. Utilizing the new Characteristics of Business Owners ( CBO ) data base, a nationwide sample of firms is utilized that is representative of the small business universe. One subset--small business employers--is shown to have relatively low rates of failure, while another group--very small firms with no employees--exhibits relatively high rates of business discontinuance. The finding that the probability of firm failure is strongly (inversely) related to firm size is shown to hold up as well when the age of the business is controlled for.View Full Paper PDF
