Growth and Firm Size Distribution: An Empirical Study of Listed E-Commerce Companies in China

Growth and Firm Size Distribution: An Empirical Study of Listed E-Commerce Companies in China

Wei Zhang (School of Information, Central University of Finance and Economics, Beijing, China), Yan-Chun Zhu (Business School, Beijing Normal University, Beijing, China), Jian-Bo Wen (School of Foreign Studies, Central University of Finance and Economics, Beijing, China) and Yi-Jie Zhuang (Technical Infrastructure, Google Inc., Mountain View, CA, USA)
Copyright: © 2016 |Pages: 13
DOI: 10.4018/JECO.2016040105
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Abstract

Studies on the firm's size distribution (FSD) can set a good foundation to know about the growth path and mechanism of e-commerce firms. The purpose of this paper is to understand features of the China's listed e-commerce firms by testing Gibrat's law and Zipf's law within the Internet sectors. From a macroscopic perspective, with the approach of OLS estimation, Zipf's coefficient of the FSD is calculated to test whether Zipf's law holds. From a microscopic perspective, the relationship between e-commerce firm size and growth is explored by quantile regression method. The results indicate that from 2005 to 2014, Zipf's law cannot be rejected, with the relationship changing over time, Gibrat's law holds partly. It implies that competition status among China's e-commerce firms becomes more stable.
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2. Literature Review

Firm size distribution is one of the core issues of modern firm theory (Davidsson, Achtenhagen, and Naldi 2010; Nason and Wiklund, 2015). With the analysis of firm size distribution, researchers and policy makers can know about the concentration degree of the specific industry, have an insight into the industry's business cycle and timely implement anti-monopoly policy (Kang et al, 2011). Thus, in recent years, practitioners and scholars began to focus on firm size distribution problems. Distribution law and feature research have become an important task in the field of economics, economic physics, management science and other areas. Currently, the researches on firm size distribution were mainly concentrated in the Gibrat’s Law and interpretation (Nason and Wiklund, 2015).

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