Generalising Gibrat: using Chinese evidence founded on fieldwork

This paper reports on determinants of small firm growth and survival, using fieldwork evidence collected by face-to-face and telephone interviews. It extends the ‘basic’ size-age model to a ‘comprehensive’ growth model with two types of additional explanatory variables: firm specific and business environmental. Estimation is by log-linear regression on Chinese cross-section data, with corrections for sample selection bias and heteroskedasticity. Our results from the comprehensive model highlight the importance of location choice and customer orientation for the growth of Chinese private firms.