Working Paper: NBER ID: w7275
Authors: Bruce A. Blonigen; Kasaundra Tomlin
Abstract: Using a unique database on all Japanese manufacturing plants in the United States, we examine the relationship between plant size and growth for these foreign-owned plants. These plants average sizes are three times larger than comparable U.S. plants and experienced 30 percent growth from 1987 through 1990, while U.S. average plant sizes declined over the same period. Our estimates strongly reject Gibrat's Law for these plants, and suggest that smaller plants grow faster. We also find learning affects plant-level growth. Newer plants grow quicker and previous investments by the parent firm mean slower growth, particularly for automobile-related plants. Both are consistent with inexperienced firms growing faster as they learn.
Keywords: No keywords provided
JEL Codes: F23; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| smaller plants (Q29) | faster growth (O49) |
| doubling of plant's size (O40) | reduces growth rate (O40) |
| newer plants (Q29) | quicker growth (O49) |
| previous investments by parent firm (G31) | slow growth (O41) |
| automobile-related investments (L62) | higher growth rates (O49) |
| learning effects (C92) | more pronounced in automobile sector (L62) |