Simulating the emergence of superstar firms: The role of luck vs talent

This paper explores the dynamics of superstar firms, introduced by Rosen's seminal work on talent's role in success. The traditional viewpoint posits that technological advancements drive market dominance by highly talented individuals, creating a 'superstars' landscape. The paper challenges this perspective, introducing luck as a crucial and overlooked factor in shaping the success of superstar firms. Using an agent-based model, the study simulates the emergence of superstars in twelve countries. The results suggest that while talent and technology are essential, luck also plays a significant role in the 'rich get richer' phenomenon observed in superstar firms, emphasizing the multifaceted nature of success and suggesting opportune policy strategies to foster true meritocracy.