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Review of Industrial Organization 24: 301324, 2004.
2004 Kluwer Academic Publishers. Printed in the Netherlands. 301Gibrats Law: Are the Services Dierent?D.B. AUDRETSCH1, L. KLOMP2, E. SANTARELLI3
and A.R. THURIK4,?1Institute for Development Strategies, Indiana University; Max Planck Institute for Entrepreneurship, Growth and Public Policy, Jena; Centre for Economic Policy Research (CEPR),
London; and EIM Business and Policy Research, Zoetermeer. E-mail:[email protected] for Innovation, Ministry of Economic Aairs, The Hague. E-mail:[email protected] of Economics, University of Bologna; Max Planck Institute for Entrepreneurship,
Growth and Public Policy, Jena; and ENCORE, Amsterdam. E-mail:[email protected] for Advanced Small Business Economics (CASBEC), JenaAbstract. Several noted surveys on intra-industry dynamics have reached the conclusion from
a large body of evidence that Gibrats Law does not hold. However, almost all of these studies
have been based on manufacturing or large scale services such as banking and insurance
industries. There are compelling reasons to doubt whether these ndings hold for small scale
services such as the hospitality industries. In this paper we examine whether the basic tenet
underlying Gibrats Law that growth rates are independent of rm size can be rejected for
the services as it has been for manufacturing. Based on a large sample of Dutch rms in the
hospitality industries the evidence suggests that in most cases growth rates are independent of
rm size. Validation of Gibrats Law in some sub-sectors of the small scale services suggests
that the dynamics of industrial organization for services may not simply mirror that for
manufacturing. The present paper includes a survey of nearly 60 empirical studies on rm
growth rates.Key words: Firm growth, Gibrats Law, service industriesJEL Classications: D21, L11, L60, L80.I. IntroductionIn his exhaustive survey in the Journal of Economic Literature, Sutton (1997,p. 40) observed that publication of Ine
galitesEconomiques by Gibrat (1931)
triggered, One of the most important strands in the literature on market
structure. Sutton points out that what is commonly referred to as Gibrats
Law is something of a misnomer. Rather than constituting a bona de Law,
what Gibrat proposed is actually an assumption that the probability of the
next opportunity is taken up by any particular active rm is proportional to? Author for correspondance: Centre for Advanced Small Business Economics, Rotterdam
School of Economics, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam,