Page 31 - research-at-iimv-june-01-2022-v3
P. 31

ABDC-C









                                                                  Villari, B. C., Subramanian, B., Kumar, P., & Hota, P. K. (2021).

                                                                  Do Firm Growth Models Work in Service Industries in
                                                                  Developing Economies? An Investigation of the Relationship

                                                                  Between Firms’ Growth, Size and Age. Journal of
                                                                  Interdisciplinary Economics,33(2), 215-225.





        Growth models such as Gibrat’s law and Jovanovic’s theory that
        examine the relationship between the firms’ growth, age and size
        have either been tested on data from developed economies or
        from the manufacturing sectors in developing economies. This
        study checks the suitability of these models in service sectors in
        developing economies as service sectors have distinct
        characteristics and developing economies such as India are
        heavily dependent on this sector. The current study considers
        three major service sectors contributing to India’s economy
        vis-à-vis  financial  services,  information  technology  and  real
        estate  for the period 2002–2005.  We observed that during
        2002–2005, India’s economy was stable without wide fluctuations
        in economic performance, such as gross domestic product,
        unemployment or inflation. These sectors not only had a
        significant impact on economic growth but also had
        comprehensive microeconomic data. Our results negate both
        Gibrat’s law and Jovanovic’s theory. We argue that service sectors
        which are knowledge-intensive will experience different growth
        patterns compared to manufacturing sectors. We find a definite
        and significant relationship between firms’ growth and their size
        and age. Also, we find concluding evidence that younger firms up
        to 10 years of age struggle a lot more than older firms in the Indian
        service sector.



      PAGE 25
   26   27   28   29   30   31   32   33   34   35   36