| International Journal of Business and Economics Volume 22, No. 2 September, 2023 |
| Firm Growth and Total Factor Productivity: A Methodology for Examining the Size Controversy |
| Tarek Eldomiaty |
| School of Business, The American University in Cairo, Egypt |
| Marina Apaydin |
| School of Business, The American University in Cairo, Egypt |
| Jasmine Fouad |
| School of Business, The American University in Cairo, Egypt |
| Marwa Anwar |
| Misr International University, Egypt |
| Heba El Zahed |
| Misr International University, Egypt |
| Abstract |
| This paper examines the significance and robustness of four measures of growth of the firm with respect to firm-level Total Factor Productivity (hereinafter TFP). These four measures are (a) growth of total assets, (b) growth of sales, (c) growth of fixed assets, and (d) weighted growth of fixed assets. The four measures are examined in the business and economics literature in different contexts. The results of related studies do not include a consensus regarding the validity of a certain measure. The ultimate objective of this paper is to present a realistic view of growth of the firm.The data used in this paper represent the non-financial firms listed on DJIA30 and NASDAQ100. These data were obtained from Reuters Finance database© (https://www.reuters.com/markets/) and cover the quarterly periods from June 1992 till March 2018The results of the robustness test show that (a) firm-level TFP is positively associated with weighted growth of fixed assets, (b) the estimates of weighted growth of fixed assets are robust which is an indication to the intrinsic relationship with firm-level TFP, (c) the significance of weighted growth of fixed assets varies across industries which reflects an industry effect. This paper contributes to the related literature by examining the robustness of the common measures of growth of the firm. As far as growth of the firm and size are exchangeable, the lack of conformity in the literature raises a controversy regarding the search for a reliable measure of size and growth of the firm. |
| Keywords：Growth of The Firm, Size of The Firm, Firm-Level Total Factor Productivity, Robustness, Growth of Total Assets, Growth of Sales, Growth of Fixed Assets, Weighted Growth of Fixed Assets |
| JEL Classifications：M21 |
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