The Nonlinear Relationship Between Firm Size and Growth in the Automotive Industry

The automotive industry dominates the economy of the west part of Romania, making necessary the identification of firm growth drivers. Accordingly, the purpose of this paper is to analyse the nonlinear impact of firm size in influencing firm growth. To do so, we use a panel quantile regression with fixed effects for a set of 19 automotive companies over the period 2007–2015, while controlling for the role of research and development activities and firm’s financial performances. We show that firm size positively sustains firm growth at all quantiles, whereas this relationship is stronger for companies that grow less fast. Our findings are robust to the computation of firm growth and size based on different indicators and are not influenced by the agglomeration effect.