Abstract The effect of financing frictions on firm productivity growth is not well understood. Using a model we show that rise in financial leads to increased sensitivity the use external finance. We test this prediction using large dataset mostly private European firms and find strong evidence supporting prediction. Our findings demonstrate an important link between markets real economy, help ...

Managers face a critical task in making firm investment decisions that are targeted toward creating and appropriating value. As managers weigh their resource investment decisions, we argue that these investments have a direct impact on the growth and volatility of the firm’s industry. With data covering 377 industries across 16 years, we investigate relationships for aggregate firm investments ...

We propose a network model of firm volatility in which the customers’ growth rate shocks influence the growth rates of their suppliers, larger suppliers have more customers, and the strength of a customer-supplier link depends on the size of the customer firm. Even though all shocks are i.i.d., the network model produces firm-level volatility and size distribution dynamics that are consistent w...

This paper shows that randomness can be an artefact of the methods used to examine firm performance. It questions the recent equating of entrepreneurship with gambling based on the assumption of random firm performance. It shows that complexity science provides a useful alternative perspective on randomness in relation to firm performance.

We study the impact of bank credit supply on the output and productivity of borrower firms. Exploiting a matched firm-bank database covering all credit relationships of Italian corporations over more than a decade, we measure idiosyncratic supply-side shocks to firm credit availability. Then, we estimate a production model augmented with heterogeneous financial frictions, to show that an expans...