Firm dynamics of international joint ventures in Shanghai's manufacturing sector: Testing the validity of Gibrat's Law

Kong Wing, Clement CHOW, Ka Yiu, Michael FUNG

Research output: Journal PublicationsJournal Article (refereed)

Abstract

How joint ventures (JV) grow over time has important implications on government JV policies and enterprises' decisions in JV formation. A paper studies JVs in the manufacturing industries of Shanghai by analyzing the empirical relationship between the size of JVs with their growth over time. Whether Gibrat's Law can describe the dynamic behavior of JVs is tested by using the panel data of 4 Shanghai industries from 1989 to 1992. Two empirical results are obtained: 1. Small JVs are better in creating jobs than large JVs. 2. In terms of output growth, both small and large JVs follow a simple stochastic growth process which is more or less dictated by the Gibrat's Law.
Original languageEnglish
Pages (from-to)20-27
Number of pages8
JournalJournal of Applied Business Research
Volume12
Issue number4
DOIs
Publication statusPublished - 1 Jan 1996

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