2001/03/28 by Giulio Bottazzi, Bottazzi, Giulio
Business, Management and Accounting · Economics, Econometrics and Finance · Physics and Astronomy · #Condensed Matter (cond-mat) #Entrepreneurship Studies and Influences #FOS: Physical sciences #Firm Innovation and Growth #Global trade and economics #cond-mat
paper · pdf · doi:10.48550/arxiv.cond-mat/0103575
arxiv created 2001/03/28 · openalex publication_date 2001/03/28 · arxiv updated 2009/11/30 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
The paper presents an analysis performed over the worldwide top 150 firms in the pharmaceutical industry. It begins with a test of the Gibrat's Law of Proportionate Effect finding, in line with previous literature, a violation concerning the variance of the growth. Then it shows, using disaggregated data on sub-markets (defined according to the ATC code) that this violation can be completely referred to the existence of a ``diversification'' effect, namely a scale relation between the number of active sub-markets a firm posses and its size. The observed scaling property of the firms diversification patterns is in contrast with the linear assumption typically made in literature. Finally, to interpret the findings, the work proposes a stochastic model for firms diversification which fits quite well the data.