  Detailed empirical studies of publicly traded business firms have established
that the standard deviation of annual sales growth rates decreases with
increasing firm sales as a power law, and that the sales growth distribution is
non-Gaussian with slowly decaying tails. To explain these empirical facts, a
theory is developed that incorporates both the fluctuations of a single firm's
sales and the statistical differences among many firms. The theory reproduces
both the scaling in the standard deviation and the non-Gaussian distribution of
growth rates. Earlier models reproduce the same empirical features by splitting
firms into somewhat ambiguous subunits; by decomposing total sales into
individual transactions, this ambiguity is removed. The theory yields
verifiable predictions and accommodates any form of business organization
within a firm. Furthermore, because transactions are fundamental to economic
activity at all scales, the theory can be extended to all levels of the
economy, from individual products to multinational corporations.
