Superstar Firms through the Generations

We present new facts about the largest American companies over the past century. In manufacturing, top firms in the 1910s, 1950s, and 2010s predominantly date back to around 1900. Even as this special generation persists, turnover among top firms has been substantial. In contrast, in retail and wholesale, we do not observe a special generation among top firms. We show in a model of firm dynamics that a special generation can arise from an industrial revolution, through the adoption of a scalable technology and learning-by-doing. Top firm turnover is matched by standard idiosyncratic productivity shocks. Time-varying market size growth rates or entry costs are not sufficient to explain the facts. Among retailers and wholesalers, learning appears absent, so a special generation would be harder to sustain. Our results highlight the potential for lasting nonstationarity among the dynamics of top firms, which can result from the long echoes of technological change.