Firm growth in multinational corporate groups

Abstract

This paper formulates an econometric firm growth model that explicitly accounts for the interdependence of firm performance within corporate networks and is in line with several economic theories on firm growth. We test the model for national and multinational corporate groups using a recently introduced instrumental variable estimation procedure for peer group eects developed by Lee (2007). In our data for corporate groups the observation of fast growing young firms and slow growing old firms disappears if interdependence of firm performance within corporation networks is introduced.