{"id":5102,"date":"2025-06-19T23:14:15","date_gmt":"2025-06-19T23:14:15","guid":{"rendered":"https:\/\/ijssass.com\/journal\/do-firms-growth-rates-follow-a-random-walk-evidence-from-incubated-small-and-medium-enterprises-in-south-africa\/"},"modified":"2025-06-20T03:19:11","modified_gmt":"2025-06-20T03:19:11","slug":"do-firms-growth-rates-follow-a-random-walk-evidence-from-incubated-small-and-medium-enterprises-in-south-africa","status":"publish","type":"post","link":"https:\/\/ijssass.com\/journal\/do-firms-growth-rates-follow-a-random-walk-evidence-from-incubated-small-and-medium-enterprises-in-south-africa\/","title":{"rendered":"Do Firms\u2019 Growth Rates Follow a Random Walk? Evidence from Incubated Small and Medium Enterprises in South Africa"},"content":{"rendered":"

This article was originally published as: Do Firms\u2019 Growth Rates Follow a Random Walk? Evidence from Incubated Small and Medium Enterprises in South Africa<\/strong><\/p>\n

Original Article Link: Read Original Article<\/a><\/p>\n

Download PDF: Click Here to Download PDF<\/a><\/p>\n

Abstract<\/h2>\n

Debate on the validity of the Law of Proportionate Effect (LPE) on firm growth is ongoing decades after it was postulated by Gibrat in 1931. The theoretical model which asserts that firm growth follows a random walk has been largely tested in developed economies using data from non-incubated firms, with scanty research in developing regions like Africa. This paper, therefore, aims to address this gap by being the first to assess the validity of Gibrat’s law on incubated small, medium, and micro enterprises (SMMEs) in South Africa. The study utilised four-year panel data from 300 incubated SMMEs across the country, for the period between 2018 to 2021. Utilising the Law’s generalised growth rate model, the generalised least square regression modelling was harnessed, using R Software. The findings, using sales as firm size proxy, confirmed Gibrat\u2019s Law. The results showed that firm size had no effect on the sales growth rate of incubated firms, on the other hand when employment proxied performance the LPE was rejected. The findings provide important implications for both practitioners and pertinent stakeholders in the SMME sector in South Africa.<\/p>\n

Authors<\/h2>\n
    \n
  • Helper Zhou (Durban University of Technology, South Africa)<\/li>\n
  • Robert Zondo (Durban University of Technology, South Africa)<\/li>\n<\/ul>\n

    Keywords<\/h2>\n

    Gibrat\u2019s law, incubation, random walk, SMME, South Africa, stochastic<\/p>\n

    References<\/h2>\n

    References not available for this article.<\/p>\n","protected":false},"excerpt":{"rendered":"

    This article was originally published as: Do Firms\u2019 Growth Rates Follow a Random Walk? Evidence from Incubated Small and Medium…<\/p>\n","protected":false},"author":21,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[2153,1779,1780,1781,1782,1265,1783],"class_list":["post-5102","post","type-post","status-publish","format-standard","hentry","category-articles","tag-ajims","tag-gibrats-law","tag-incubation","tag-random-walk","tag-smme","tag-south-africa","tag-stochastic","wpcat-124-id"],"yoast_head":"\nDo Firms\u2019 Growth Rates Follow a Random Walk? 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