Firm Size Adjustment: Employment or Output?

Entrance of firms with different sizes from the minimum efficient Size (MES) is an economic fact in the real world. Nevertheless, it is expected that firms can approach the minimum efficient size for their survival and with a deliberate speed called "speed adjustment". The basic question in industrial economic is how firms can adjust this speed.Although based on the theoretical basis firms can adjust their speed according to the output, in the real world, it will be done based on employment criteria. Hence, this study tries to adjust new firms' sizes in manufacturing industries over the period of 1996-2002 and evaluate the speed by using employment and production standards and extract the top criteria. By using Comanor-Wilson method, current evidence shows that more than 90 percent of firms have always worked with both employment and production standards in size less than MES. The speed of adjustment, calculated by l coefficient, also indicates that the firms with less optimal sizes have lower speed of adjustment unexpectedly.This finding, in terms of policy, on the one hand,  have shown the need to rise new firms' awareness to know the optimal size and suitable speed and on the other hand, high light the likely with drawl of most firms over time