This paper investigates the channels linking investment and firm performance in the French and Italian manufacturing industries and proposes a novel methodology to identify investment spikes which corrects for nonlinear size dependence. Using large data sets reporting observed investment from official sources, we provide a systematic comparison of the relation between investment and firm performance across (i) different definitions of investment spikes, our proposed measure and previous ones; (ii) different institutional settings, i.e. France and Italy; (iii) several performance proxies; and (iv) investment types. We show that the failure to account for the scaling relation between investment spikes and firm size can bias such analyses. Moreover, differences also emerge across countries in the way investment spikes translate into future firm performance.

Cette étude questionne le processus d’investissement des entreprises du secteur manufacturier en France entre 1996 et 2007. Nous confirmons la présence de pics d’investissements mais identifions aussi une certaine continuité des taux d’investissement dans le temps, indiquée par un coefficient d’autocorrélation relativement faible mais très persistant. En effet, le taux d’investissement est significativement et positivement corrélé avec ses valeurs passées jusqu’à dix ans d’écart. De plus, une estimation du coefficient d’autorégression montre que le taux d’investissement est partiellement expliqué par sa valeur passée. Ces résultats s’expliquent notamment par l’indivisibilité du capital, qui requiert plusieurs épisodes d’investissement pour être totalement intégré dans le fonctionnement de l’entreprise.

This work explores basic properties of the size and growth rates distributions of firms at the aggregate and disaggregate levels. Using an extensive dataset on French manufacturing firms, we investigate which properties of firm size distributions and growth dynamics characterize the aggregate dynamics and are, at the same time, robust under disaggregation. Our analysis is based on nonlinear robust regression methods which have never been applied before to this kind of data. The growth rates distributions we observe are well described by a Subbotin distribution with a shape parameter significantly lower than 1, suggesting a noticeable departure from the Laplace behaviour reported in previous works on Italian and the US data. At the same time, the variance of growth rates depends negatively on size and the relationship does not seem to be linear, with larger firms possibly displaying lower variability in their growth dynamics. At the disaggregate level, we observe significant heterogeneity in the firm size distributions across sectors, while the shape of the sectoral growth rates density displays a surprising degree of homogeneity.

Diverse theories of industry dynamics predict heterogeneity in production efficiency to be the driver of firms' growth, survival, and industrial change, either through a direct link between efficiency and growth, or through an indirect effect via profitabilities, as more productive firms can enjoy higher profit margins which, under imperfect capital markets, allow them to invest and grow more. Does the empirical evidence bear out such predictions? This article explores the dynamics of selection and reallocation through an investigation of the relations linking productivity, profitability and growth at the firm level. Exploiting large panels of Italian and French industrial firms, we find that heterogeneity in efficiencies primarily yields persistent profitability differentials, whereas the relationships of corporate growth with either productivity or profitability appear much weaker, if at all existent. This suggests that selection forces are much less strong than usually assumed. The results robustly apply across different industrial sectors and across the two countries.

Evolutionary approaches of the firm devote a part of their analysis to firm behavior and to some processes acting inside the firm , however the internal workings of firms are, most of the time, not deeply analyzed. In this perspective, this paper attemps to investigate whether "we can drop internal selection in the evolutionary analysis of the firm. In ordre to answer this question, we propose a micro-simulation model of internal selection where firms are engaged in production and R&D activities. They carry out two kinds of R&D and do not run any imitation process. Internal selection acts on R&D projects and we measure the impact of the selection mechanism on the firm's performances. The model generates persistent differences between firms according to their internal selection process.

This paper gives some insights related to the combination of exploration and exploitation behaviors. A recurrent question for firms deals with this blend of exploration and exploitation mechanisms. Firms are engaged in new activities like research and at the same time in more routine ones like development and production. Thus, they should find a satisfying arrangement between exploitation. But in order to do that, they should better understand their working. This paper analyzes adaptive systems through exploration and exploitation behaviors of firms. In order to better understand the temporal articulation of those behaviors, we refer to a mapping representation of search processes using NK models (Kauffman, 1993).

Evolutionary approaches of the firm devote a part of their analysis to firm behavior and to some processes acting inside the firm, however the internal workings of firms are, most of the time, not deeply analyzed. In this perspective, this paper attempts to investigate whether can drop internal selection in the evolutionary analysis of the firm. In order to answer this question, we propose a micro-simulation model of internal selection where firms are engaged in production and R&D activities. They carry out two kinds of R&D and do not run any imitation process. Internal selection acts on R&D projects and we measure the impact of the selection mechanism on the firms' performances. The model generates persistent differences between firms according to their internal selection process.

Evolution is a method of searching among an enormous number of possible ‘solutions’, [10]. If, in biology, this set of possible solutions is the set of possible genetic sequences, evolution can also be seen as a «method for designing innovative solutions to complex problems », [10, p. 5]. The environment changes and thus, it is necessary to search continually new sets of possible solutions. Even if the evolution rules seem to be very complex, in particular because they are responsible for variety and complexity of species, in fact, there are rather simple. «Species evolve by means of random variation, followed by natural selection in which the fittest tend to survive and reproduce, thus propagating their genetic material to future generations », [10, p. 5].