The Rise and Fall of Business Firms
A Stochastic Framework on Innovation, Creative Destruction and Growth

Combining a statistical physics approach and rigorous econometric analysis, this new framework looks at growth and decline in business firms.

S. V. Buldyrev (Author), F. Pammolli (Author), M. Riccaboni (Author), H. E. Stanley (Author)

9781107175488, Cambridge University Press

Hardback, published 13 August 2020

238 pages, 90 b/w illus. 13 tables
25 x 17.5 x 1.5 cm, 0.6 kg

'There is a long tradition of physicists being interested in and contributing to economics. That tradition continues here in The Rise and Fall of Business Firms. The book is based on generalized proportional growth models for the dynamics and stochastics of the growth and decline of business firms. For further studies, the book points out where more detailed specific inter-related complexities (such as among products, markets, and technologies) can be incorporated. The theoretical analysis paired with empirical data provides valuable insight for firms to understand their past trajectory and future choices.' Michael F. Schlesinger, Office of Naval Research

At the intersection between statistical physics and rigorous econometric analysis, this powerful new framework sheds light on how innovation and competition shape the growth and decline of companies and industries. Analyzing various sources of data including a unique micro level database which collects historic data on the sales of more than 3,000 firms and 50,000 products in 20 countries, the authors introduce and test a model of innovation and proportional growth, which relies on minimal assumptions and accounts for the empirically observed regularities. Through a combination of extensive stochastic simulations and statistical tests, the authors investigate to what extent their simple assumptions are falsified by empirically observable facts. Physicists looking for application of their mathematical and modelling skills to relevant economic problems as well as economists interested in the explorative analysis of extensive data sets and in a physics-orientated way of thinking will find this book a key reference.

Preface
1. Introduction
2. Empirical regularities
3. Innovation and the growth of business firms: a stochastic framework
4. Testing our predictions
5. Testing our assumptions
6. Conclusions
7. Appendices
References
Author index
Subject index.

Subject Areas: Statistical physics [PHS], Physics [PH], Econometrics [KCH], Economic theory & philosophy [KCA], Economics [KC]