Sales growth of Spanish tourist firms: Some implications of Gibrat's Law on marketing management

Abstract

The research presented in this paper is targeted towards empirical validation of three hypotheses deduced from Gibrat's Law and concerning sales growth in the Spanish tourism industry. The research refers to the years 1997–2000 and uses a sample of 1131 surviving firms, all of which are devoted to tourism activities. Regression, correlation and automatic interaction detection techniques were used throughout the sample. The results show the existence of two firm growth segments set apart by a “threshold size” (reached only when initial size is measured in sales terms). Firms above the threshold size grow at a significantly lower accumulated rate than firms below it, thus contradicting Gibrat's Law. However, no relationship was observed for successive inter-annual growth rates. This in turn suggests that marketing actions and programmes have rather a medium- and long-term effect than a short-term effect over sales growth. Sound implications about the firms’ degree of market opportunity management, strategic interdependence, and market orientation were deduced from these results.