Does Gibrat’s law hold for knowledge size of high-tech firms?

ABSTRACT

In this paper, we extend the literature on Gibrat’s law of firm growth by testing Gibrat’s law for knowledge size of high-tech firms. Two measures of a firm’s knowledge size which represent its knowledge stock and diversity are developed from its portfolio of patents. Using non-parametric regressions, specifically local polynominal estimators, we find that Gibrat’s law applies to knowledge size of high tech firms, specifically when their knowledge surpasses a certain threshold in size.

KEYWORDS:

• Gibrat’s law
• knowledge size
• high-tech
• patent

JEL CLASSIFICATION:

• D21
• L11
• L25
• O30

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ We briefly follow the introduction of Gibrat’s law by Audretsch and Dohse (2007).

² A similar measure based on Herfindahl-typed index was employed in several other studies (e.g. Garcia-Vega 2006).

³ More information about the National Bureau of Economic Research’s (NBER) Patent Data Project (2006 version) can be found at: https://sites.google.com/site/patentdataproject/. About the NUS-MBS patent database, interested readers are encouraged to refer to: http://kwanghui.com/patents/about.html.