Theory and Empirical Evidence of the Irrelevance of Firm Size

Author: Zhang Yongsheng
Publisher:
Publish Date: 2003-03-02
Features: This book primarily examines the internal reasons for changes in corporate scale and their relationship with economic growth. The author first uses data from OECD countries, Asian newly industrialized countries, and China to test two types of economies of scale in new trade and growth models. These two types of economies of scale refer to the positive correlation between productivity or growth performance and the average size of enterprises. The evidence provided in the book shows that these two types of economies of scale do not receive empirical support. Then, the author offers theoretical explanations for the reasons why the empirical evidence does not align with the scale effects in these neoclassical models. Using the Smith-Coase framework, the author attempts to reveal the true driving forces behind economic growth, corporate institutions, and the significance of changes in corporate scale for economic development. On this basis, the author further explains, using the Smith-Coase framework, the emergence and evolution of franchises, the motivations behind corporate mergers and splits, and their implications for productivity improvement.