Demography of the firm: A useful metaphor?

Demography of the firm is an interdisciplinary research field of economics, sociology and economic geography. Although the name suggests otherwise, demographic input has been limited until recently. This article argues that the demographic viewpoint may lead to added value. The metaphor is relevant, not because firms are similar to biological creatures (they are not), but because there are significant parallels in the mechanisms of population change, as a result of selective processes of birth and death, as well as aging and internal change of incumbent firms. The nature of these change processes at the micro level has to be studied using theories from other disciplines, such as economics, sociology and geography; a situation quite similar to that of human demography. The article compares similarities and discrepancies between the processes of birth and death in firm and human populations, as well as the most important dimensions of population structure and change, e.g. age, period, and cohort. A main difference is that in addition to these familiar variables in human demography, firm size and growth, and economic activity are also major dimensions of the structure of firm populations. Because there are strong interactions between these variables, any demographic analysis, for instance to determine the age curve of mortality, should also take into account these variables.