Critically discuss the following statement: “Firm growth is random”

As Paul Geroski (1999, p. 4) underlines, saying that firm growth is driven by unexpected shocks does not mean that is driven by “mere chance” or “good luck”. It may be that the researcher does not know, but firm insiders (entrepreneur/manager) do - what will cause the growth opportunity (omitted factor at the firm- or macro-level), - when the opportunity will actually take place. 1. Firms which want to grow incur in adjustment costs: these costs are linked to the change in the level and/or the composition of labor and physical capital due to demand shocks and/or changes in technology adopted by the firm. firms will typically make large but infrequent and clearly discrete changes in their operations (e.g. in employment and investments), rather than continuous but small ones toward a theoretical framework 2. Most firms are erratic and irregular innovators: few firms produce major innovations or patents on a regular basis. The typical pattern is that firms will innovate every once and a while, opening up what are sometimes very long periods of time between successive innovations.