Narrow Results

This study uses a representative sample of Korean manufacturing firms for the period 2010–2018 to examine the relationship between firm size and growth in various aspects. The main findings are as follows. First, smaller firms have a higher average growth rate and wider growth dispersion (growth variance) across the firms. Second, the growth rates of micro and small firms show negative growth persistence resulting in a volatile growth pattern. In contrast, medium and large firms have a high probability that the growth rates persist over time, indicating a stable growth pattern. Third, the first and second findings are robustly observed regardless of the disaggregated sectors in the manufacturing industry, which are divided based on their technological-intensity levels. The findings imply that (a) it is necessary to analyze and understand differences in growth patterns by firm size and (b) firm growth requires policies tailored to the size of firms.

There is a discrepancy between the standard view of equilibrium through price adjustment in economics and the observation of large fluctuations in stock markets. We study here a simple model where agents decisions not only depend upon their individual preferences but also upon information obtained from their neighbors in a social network. The model shows that information diffusion coupled to the adjustment process drives the system to criticality with large fluctuations rather than converging smoothly to equilibrium.