Firm size, a self-organized critical phenomenon: Evidence from the dynamical systems theory.

摘要

This research draws upon a recent innovation in the dynamical systems literature called the theory of self-organized criticality (SOC) (Bak, Tang, and Wiesenfeld 1988) to develop a computational model of a firm's size by relating its internal and the external sub-systems. As a holistic paradigm, the theory of SOC implies that a firm as a composite system of many degrees of freedom naturally evolves to a critical state in which a minor event starts a chain reaction that can affect either a part or the system as a whole. Thus, the global features of a firm cannot be understood by analyzing its individual parts separately.; The causal framework builds upon a constant capital resource to support a volume of production at the existing level of efficiency. The critical size is defined as the production level at which the average product of a firm's factors of production attains its maximum value. The non-linearity is inferred by a change in the nature of relations at the border of criticality, between size and the two performance variables, viz., the operating efficiency and the financial efficiency. The effect of breaching the critical size is examined on the stock price reactions.; Consistent with the theory of SOC, it is hypothesized that the temporal response of a firm breaching the level of critical size should behave as a flicker noise (1/f) process. The flicker noise is characterized by correlations extended over a wide range of time scales, indicating some sort of cooperative effect among a firm's degrees of freedom. It is further hypothesized that a firm's size evolves to a spatial structure with scale-invariant, self-similar (fractal) properties. The system is said to be self-organized inasmuch as it naturally evolves to the state of criticality without any detailed specifications of the initial conditions. In this respect, the critical state is an attractor of the firm's dynamics. Another set of hypotheses examines the relations between the size and the performance variables during the sub-critical (below the critical size) and the supra-critical (above the critical size) states.; Since the dynamics of any two firms is likely to be different, the analysis is performed individually for each company within the Pharmaceuticals and the Perfume industries. The statistical results of this study provide evidence in support of the hypotheses. The size of a firm is found to be a self-organized critical phenomenon. The presence of 1/f noise and the spatial power-law behavior is taken as an evidence of the firm's size as a self-organized critical phenomenon. (Abstract shortened by UMI.)