The Influence of Size and R&D on the Growth of Firms in the U.S.

This study examines the role of size and R&D in explaining the rate of growth of firms by testing Gibrat's law. In particular, this paper extends earlier studies, by addressing this question: Do the size-growth relationships and the consequent size-distribution of firms depend on whether or not the firms are operating in R&D-intensive industries? The empirical evidence indicates an affirmative answer to this question. Further, our results appear to refute Gibrat's law. Firm growth rates are autocorrelated. There also seems to be adequate evidence showing that larger firms have lower growth rates.