Abstract:
Empirical studies have shown that the size distribution of firms can be described as a lognormal or Pareto distribution. However, these studies have focused on developed countries and little attention has been devoted to developing countries. Using the variable of number of employees as a measure of firm size, this paper investigates the shape of firm size distribution in the food & beverages industry and also in the non-metallic mineral products industry over the period of 1997-2005. Our findings show that there is no universality of the size distribution of firms between industries. In other words, the size distribution varies in terms of kind of industry, so that our results make it clear that food & beverages industry follows lognormal distribution, conversely to other industry which a good representation of Pareto distribution. From policy point of view, knowledge about firm size distribution caused new entrance firms to decide wisely and therefore provide improvement on performance after entry.
Machine summary:
"Manufacturing Firm Size Distribution in Iran Evidence from Food & Beverages and Non-Metallic Mineral Products Mohammad Ali Feizpour∗ Marjan Habibi∗∗ Abstract Empirical studies have shown that the size distribution of firms can be described as a lognormal or Pareto distribution.
Using the variable of number of employees as a measure of firm size, this paper investigates the shape of firm size distribution in the food & beverages industry and also in the non-metallic mineral products industry over the period of 1997-2005.
Although Gibrat have introduced the idea that firm size is precisely lognormally distributed, but further researches, starting with Simon and Bonini (1958), have often described the FSD by the Yule or Pareto (also known as Power Law) distribution.
5. Data and empirical findings For investigating the FSD in terms of industry, this study uses food & beverages (code 15) and the non-metallic mineral products (code 26) industries, as they are the most important industries in Iran.
Percentage of firms, employees, output value and value added in the food & beverages and the non-metallic mineral products industries; 2005 به تصویر صفحه رجوع شود Source: Statistical Center of Iran In this paper, we use the variable of number of employees as a measure of firm size for analyzing the FSD.
Table 4: Estimation of lognormal and Pareto distribution in the Non- metallic mineral products industry به تصویر صفحه رجوع شود *Significant at 5 percent level 6.
In this regards, this paper using the variable employees as a firm size tried to examine the shape of the distribution on the two import industries, food & beverages and non- metallic mineral products."