The 'Scaling Puzzle' of Firm Growth from an Individual Agent
Perspective
Rob Axtell
The Brookings Institution
Washington, DC USA 20036
The anomalous scaling of firm growth rate variance with size was first detected
in U.S. data by Stanley et al. [1996] and confirmed for Japanese data by Sutton
[2002]. Competing explanations all take an 'industry perspective,' positing
models involving the partially correlated fluctuations of multi-industry firms.
Here we describe a model in which purposive decisions by individuals
endogenously leads to firm growth rate fluctuations that scale in accord with
the empirical data. We show that this result depends on two little understood
aspects of human interaction, (1) namely the partially asynchrounous, concurrent
nature of such interactions, and (2) the topology of agent-firm communication.
The latter is partially explicable in terms of the model, but the former seems
difficult to anlayze in general.