A replication study on growth paths of young firms: Evidence from German administrative data

Abstract

This replication study contributes to the lively debate about firm-specific growth paths of new firms. Utilizing rich German administrative panel data (i.e., 895,459 young firms that submitted a turnover tax preregistration form between 2001 and 2011), the study empirically revisits new firms’ growth paths as documented in the JBV Insights paper of Coad et al. (2015). In line with their results, the empirical findings of this study corroborate that (a) growth paths of young firms are erratic, meaning that such growth paths cannot be easily sorted into a meaningful taxonomy and (b) young firms rarely persistently experience comparably high growth in sales over time. In addition, an analysis of the characteristics of persistently growing firms suggests that these tend to invest more in their founding period and are typically founded in the manufacturing industry.