Growth patterns of US professional services firms.

Edouard Ribes (1)

1 CERNA i3 - Centre d'économie industrielle i3

This paper investigates the growth of professional services firms [PSFs] in the US. It first demonstrates based on a 20 year longitudinal dataset, that Gibrat's law of firm growth doesn't hold for PSFs as the growth rate of their establishment is age and size dependent. While this behavior is shared across the US economy and the notable reference point of US manufacturing firms, US PSFs exhibit a specificity in the development of their firms that exhibit persistence in growth and in their development pattern that relies on the creation of small establishments (<50 employees) in a dynamic of market expansion.\\ Finally, this paper drills down on the growth pattern of the 25\% biggest PSFs for which the explanation of geographical expansion can be challenged. For those mature firms, growth is assumed to be spurred by investments in information and communication technology (ICT) as well as research and development (R\&D) in order to improve labor productivity. The model is calibrated to US cross sectional data and shows that under this hypothesis, an arms race exists between the top firms.

Mots clés: Firm performance; Mean Field Games; Firm growth; Professional Services Firms

Domaines: Equations aux dérivées partielles [math.AP]; Gestion et management; Méthodes et statistiques; Econométrie de la finance [q-fin.ST]; Economies et finances

Edouard Ribes. Growth patterns of US professional services firms.. 2018. ⟨hal-01762381v2⟩