Abstract for: Bolder, Better, Brighter: Toward an integrated view of the differential growth rates and sizes of firms
Looking within industries reveals firms of widely different sizes. Interest in the causes and consequences of the size distribution of firms has generated many potential explanations. While these explanations are often seen as competing, we suggest that many are important but with different amounts of influence at different phases of an industry life cycle. In this paper we first group existing explanations into three primary categories: bolder firms willing to be more aggressive in capacity additions sooner enabling further growth; better firms able to grow at a rate that other firms cannot justify or afford; and brighter firms that leverage their size to time expansion and contraction accurately in a fluctuating (cyclical) market. We propose that this grouping of explanations into three categories is useful because the groupings correspond to the relative importance of these explanations and how they change over the course of an industry life cycle. After discussing and grouping the explanations, explaining how they are likely to vary over the course of an industry life cycle, we develop a model to test the logic of the grouping and the argument that each group of explanations is specific to a given period in an industry life cycle.