The Growth of Firms and Industry Dynamics from edX

We are all in admiration of so-called unicorns that experience high growth to reach $1 billion or more in value. But how common are these firms? Can they be predicted in advance?

While the popular press often gives a distorted view by focusing on success stories, this course offers a balanced view of the overall structure and dynamics of the population. A “big picture” view is presented first, showing the huge dispersion that persists within business populations in terms of growth rates, age, productivity, and the firm size distribution. Models of industry dynamics (Gibrat's Law, Gamblers' Ruin Theory) are simple and powerful ways of explaining the emergence of the observed distributions. We then summarize economic studies in the area to uncover the characteristics and determinants of firm growth, to enhance our ability to predict which firms will grow. Various firm-level and industry-level theories have been put forward to explain why some firms grow faster than others, and these theories will be discussed, highlighting their strengths as well as their limitations.

The course welcomes students who want to pursue their studies and their career in the business world, such as economists and business analysts, investors, financial sector professionals, public policy professionals, and also aspiring entrepreneurs.

The student will watch videos, read background materials, participate in discussion fora, and take polls and quizzes as they strengthen their understanding and critical analysis of the modern industry landscape.

What's inside

Learning objectives

Explain the distributions of firm size, firm age, firm-level productivity, and firm growth
Apply a class of useful models that includes gibrat's law and gambler's ruin theory

Develop an aerial view of the determinants of firm growth that have been reliably identified by researchers
Conduct a comparison and critical evaluation of various theories of firm growth, that each provide an internally-coherent depiction of certain aspects of firm growth

Explain the distributions of firm size, firm age, firm-level productivity, and firm growth
Apply a class of useful models that includes gibrat's law and gambler's ruin theory
Develop an aerial view of the determinants of firm growth that have been reliably identified by researchers
Conduct a comparison and critical evaluation of various theories of firm growth, that each provide an internally-coherent depiction of certain aspects of firm growth

Syllabus

WEEK 1: Fundamentals of Industry Structure

Week 1 Introduction

Firm Demographics

The Framework of Firm Growth

Week 1 Test

WEEK 2: Gibrat’s Law and Its Implications

Week 2 Introduction

Gibrat’s Law

Extending Gibrat’s Law

Week 2 Test

WEEK 3: Determinants of Firm Growth

Week 3 Introduction

Size and Age

Other Predictors of Firm Growth

Week 3 Test

WEEK 4: Theories of the Growth of Firms

Week 4 Introduction

Theories of Firm Growth

Strategies and Processes of Firm Growth

Week 4 Test

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Applies widely-recognized research methods used within business, economics, and finance

Taught by industry experts Alex Coad

Examines key concepts of finance, economics, and business

Well-suited for students who want to gain knowledge in Economics, Finance, or Business

Provides hands-on practice through simulation and discussion

Offers a balanced overview of the term and its application in different industries

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in The Growth of Firms and Industry Dynamics with these activities:

Volunteer at a Small Business Incubator

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Gain practical insights into the challenges and opportunities faced by small businesses, enhancing your understanding of firm growth dynamics.

Browse courses on Small Business

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Identify local small business incubators or support organizations.
Contact the organization and inquire about volunteer opportunities.
Assist with tasks such as mentorship, business development, or event planning.

Review Basic Economic Theory

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Refresh your memory on key economic terms and concepts to enhance your grasp of advanced concepts in this course.

Browse courses on Economics

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Revisit textbooks from introductory economic courses.
Enroll in a free online refresher course in basic economics.
Attend a workshop or seminar on fundamental economic principles.

Form a Study Group

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Enhance your understanding and retention of course material by engaging in regular discussions and group study sessions with your peers.

Browse courses on Collaboration

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Identify a group of peers who are also taking the course.
Establish regular meeting times and locations.
Review course materials together, discuss key concepts, and work on assignments collaboratively.

Five other activities

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Read 'The Innovator's Dilemma' by Clayton M. Christensen

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Gain insights into the challenges faced by established businesses in adapting to disruptive innovations, enriching your understanding of firm growth dynamics.

View The Disruptive Innovation Set (2 Books) on Amazon

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Read the book thoroughly and take notes on key concepts.
Engage in discussions with peers or a mentor to delve deeper into the ideas presented.

Analyze Industry Growth Data

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Practice applying Gibrat's Law and other models to analyze industry data, enhancing your ability to identify potential growth opportunities.

Browse courses on Industry Analysis

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Obtain industry growth data from reputable sources.
Use statistical software or online tools to analyze the data.
Apply Gibrat's Law and other models to interpret the findings.
Generate insights and identify potential growth areas.

Develop a Case Study on Firm Growth

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Deepen your understanding of firm growth factors by developing a case study that examines the determinants of growth for a specific company.

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Select a company that has experienced significant growth.
Research the company's history, industry, and key strategies.
Analyze the company's financial data and growth metrics.
Identify the key factors that have contributed to the company's growth.
Write a comprehensive case study outlining your findings.

Participate in a Business Simulation

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Test your understanding of firm growth strategies by participating in a business simulation that challenges you to manage a company in a competitive environment.

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Join a business simulation platform or competition.
Develop a growth strategy for your simulated company.
Make strategic decisions and manage your company's operations.
Analyze the results of your decisions and adjust your strategy accordingly.

Contribute to Open-Source Projects on Firm Growth

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Enhance your understanding of firm growth by contributing to open-source projects that focus on analyzing and predicting business growth.

Browse courses on Open Source

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Identify open-source projects related to firm growth.
Review the project documentation and codebase.
Contribute to the project by reporting bugs, suggesting improvements, or adding new features.

Career center

Learners who complete The Growth of Firms and Industry Dynamics will develop knowledge and skills that may be useful to these careers:

Management Consultant

Management Consultants help businesses improve their performance. They use their knowledge of business principles to identify problems and develop solutions. The course, "The Growth of Firms adn Industry Dynamics," can help a Management Consultant by giving them a better understanding of how businesses grow and how to improve business performance.

See salaries and explore the career path for Management Consultant

Strategy Consultant

Strategy Consultants help businesses develop and implement strategies for growth. They use their knowledge of business and industry dynamics to identify opportunities and develop plans to achieve them. The course, "The Growth of Firms adn Industry Dynamics," may be useful to a Strategy Consultant by giving them a better understanding of how industries evolve and how businesses can position themselves. With this improved understanding, a Strategy Consultant can develop more effective strategies for growth.

See salaries and explore the career path for Strategy Consultant

Policy Analyst

Policy Analysts develop and analyze public policies. They use their knowledge of economics and other social sciences to assess the impact of different policies on individuals, businesses, and society as a whole. Many Policy Analysts specialize in specific industries. The course, "The Growth of Firms adn Industry Dynamics," can help a Policy Analyst by deepening their understanding of how industries operate and evolve. This understanding can help a Policy Analyst make better recommendations for public policy.

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Venture Capitalist

Venture Capitalists invest in new and emerging businesses. They use their knowledge of business and industry dynamics to identify companies with the potential for growth. The course, "The Growth of Firms adn Industry Dynamics," can help a Venture Capitalist by giving them a better understanding of how businesses grow and how industries evolve. This improved understanding can help a Venture Capitalist make better investment decisions.

See salaries and explore the career path for Venture Capitalist

Economist

Economists study the production, distribution, and consumption of goods and services. They use their knowledge to advise businesses and governments on economic policy. Many Economists specialize in fields that give attention to understanding growth and changes in industries. The course, "The Growth of Firms adn Industry Dynamics," could help an Economist refine their understanding of how different industries operate and evolve. This may lead to more informed advice about resource allocation and economic policy.

See salaries and explore the career path for Economist

Private Equity Investor

Private Equity Investors invest in companies that are not publicly traded. They use their knowledge of business to identify companies with the potential for growth. The course, "The Growth of Firms adn Industry Dynamics," can help a Private Equity Investor by giving them a better understanding of how businesses grow and how to evaluate different investment opportunities.

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Research Analyst

Research Analysts study a variety of topics, including economics, finance, and public policy. They use their research to develop insights and make recommendations to clients. The course, "The Growth of Firms adn Industry Dynamics," may be useful to a Research Analyst by giving them a better understanding of how businesses grow and how industries evolve. This improved understanding can help a Research Analyst make more informed recommendations to clients.

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Market Researcher

Market Researchers study consumer behavior and trends. They use this information to help businesses develop new products and marketing campaigns. The course, "The Growth of Firms adn Industry Dynamics," may be useful to a Market Researcher by giving them a better understanding of how industries evolve and how this evolution affects consumer behavior. This improved understanding can help a Market Researcher make better recommendations for product development and marketing strategy.

See salaries and explore the career path for Market Researcher

Data Scientist

Data Scientists use data to solve problems and make predictions. They use their knowledge of statistics and computer science to analyze data and develop models. The course, "The Growth of Firms adn Industry Dynamics," may be useful to a Data Scientist by giving them a better understanding of how businesses grow and how industries evolve. This improved understanding can help a Data Scientist develop better models for predicting business growth and industry trends.

See salaries and explore the career path for Data Scientist

Business Analyst

A Business Analyst helps businesses become more efficient and reach their goals. These professionals use data to understand the processes and operations of a company, and then make recommendations for improvement. Much of a Business Analyst's work concerns how a company's structure and dynamics affect its growth. The course, "The Growth of Firms adn Industry Dynamics," may be useful to a Business Analyst since it provides information about how firms grow and what factors contribute to this growth. This can help a Business Analyst better understand the companies they work with and make more informed recommendations.

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Operations Research Analyst

Operations Research Analysts use mathematical models to solve problems and improve decision-making. They use their knowledge of mathematics and statistics to develop models that can be used to optimize processes and improve efficiency. The course, "The Growth of Firms adn Industry Dynamics," may be useful to an Operations Research Analyst by giving them a better understanding of how businesses grow and how industries evolve. This improved understanding can help an Operations Research Analyst develop better models for improving business performance.

See salaries and explore the career path for Operations Research Analyst

Financial Analyst

Financial Analysts help businesses and individuals make investment decisions. They use their knowledge of economics to analyze financial data and make recommendations about where to invest money. Many Financial Analysts find success by specializing in specific industries, which requires knowledge of these industries' growth and dynamics. The course, "The Growth of Firms adn Industry Dynamics," may be useful to a Financial Analyst by enlarging their understanding of industry dynamics. With this understanding, a Financial Analyst can better assess the risks and rewards associated with different investment strategies.

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Investment Banker

Investment Bankers help companies raise money by issuing and selling securities. They also advise companies on mergers and acquisitions. Many Investment Bankers specialize in specific industries, which gives them an advantage when it comes to advising companies on strategic decisions. The course, "The Growth of Firms adn Industry Dynamics," can help an Investment Banker by giving them a better understanding of various industries. This improved understanding can lead to better advice for company clients.

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Professor

Professors teach and conduct research at colleges and universities. They use their knowledge to educate students and advance our understanding of the world. The course, "The Growth of Firms adn Industry Dynamics," may be useful to a Professor by giving them a better understanding of how businesses grow and how industries evolve. This improved understanding can help a Professor develop more engaging and relevant lesson plans and research agendas.

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Software Engineer

Software Engineers design, develop, and maintain software systems. They use their knowledge of computer science to create software that meets the needs of users. The course, "The Growth of Firms adn Industry Dynamics," may be useful to a Software Engineer by giving them a better understanding of how businesses grow and how industries evolve. This improved understanding can help a Software Engineer develop better software systems that meet the needs of businesses.

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The Growth of Firms and Industry Dynamics

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