Econometrics and the Growth of Firms: Perspectives from Evolutionary Economics

Abstract

This article discusses recent results and future research possibilities in the areas of econometrics and firm growth, drawing on Dosi and Marengo’s “10 building blocks” of evolutionary theory. These 10 building blocks are: dynamics first!, microfoundations, realism is a virtue, bounded rationality, persistent heterogeneity, novelty in the system, selection mechanisms, emergent properties at the aggregate level, emergence of organizational forms and institutions, and coevolution across levels of analysis and timescales. As it happens, many of our comments relate to the theme of “realism is a virtue.” We also suggest, in some cases, which econometric techniques might be more appropriate for research into firm growth and performance, given these 10 building blocks.