S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics (SJE) Seoul Journal of Economics vol.31 no.1~4 (2018)
Tobins q of a Multi-Product Firm and an Endogenous Growth of a Firm
- Issue Date
- Seoul Journal of Economics, Vol.31 No.4, pp. 377-399
- Tobin’s q ; Multi-product firm ; Catch up ; Fixed capital good ; Endogenous growth ; Korean chaebol ; Gibrat’s law
- This study considers the Tobins q of a multi-product firm with fixed capital goods. This modified version of Tobins q includes a share of the fixed capital goods in a firms investment. A firm in a developing economy, such as a South Korean chaebol, catches up the world frontier technology with its diverse products. The fixed capital investments of chaebols are conducive in pursuing diversifications, thereby exhibiting high Tobins q. Moreover, achieving an Ak technology enables chaebols to reap their growth on the endogenous path. We observe a high disparity between the chaebol-incumbent and non-incumbent firms in their growth performances in the previous half-century experience of the South Korean economy. We attribute this disparity to the endogenous growth of chaebols.