Abstract

Our paper aims to participate to the growing policy discussion on high-growth firms (HGFs) by analyzing persistence of high growth patterns over crisis. During downturn periods, such as post pandemic one, policy makers seek sources to maintain competitiveness and accelerate growth. Being dynamic players in economic growth and job creation, persistent high-growth firms are notable candidates for assuming that role under such circumstances. Therefore, in this study we explore the determinants and characteristics of HGFs and persistent high-growth firms (PHGF) in a crisis scenario.We use a sample of 190,247 firms from 2007 to 2014. We estimate a multinomial probit model with independent idiosyncratic components across the different categories (i.e. HGFs, PHGFs and other firms) using full maximum likelihood. In a second phase we explore which characteristics of HGFs affect the probability of being a PHGFs.HGFs are characterized by higher productivity and leverage, and PHGFs systematically differ from other HGFs only in what regards degree of international involvement. HGFs probability of maintaining high growth rates is very low.HGFs are essentially one-hit wonders and it is debatable whether policymakers can enhance economic results by targeting them. Policy makers should be directed towards those firms which have in principal the potential to be winners, but only through policy intervention these aided firms can realize their great potential (i.e. pick and build winner).

Highlights

  • In todays’ economies most firms do not grow, while a little part of them, registering highgrowth, are responsible for a big share of job and income creation (Henrekson and Johansson, 2010; Brown and Mawson, 2013; OECD, 2010)

  • High-growth dependency for large firms Being a high-growth firms (HGFs) in the previous four years has a significant impact on firm performance in the subsequent four years, and the effect is more evident as firm-size increases

  • Model 1 reports the estimates obtained for the odds of being other firms against being an HGFs, while results for Model 2 show how firm and industry characteristics associate with the odds of being a persistent high-growth firms (PHGF) rather than an HGF

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Summary

Introduction

In todays’ economies most firms do not grow, while a little part of them, registering highgrowth, are responsible for a big share of job and income creation (Henrekson and Johansson, 2010; Brown and Mawson, 2013; OECD, 2010). Fast growing firms have been acknowledged by policy makers as an important source of economic competitiveness able to alleviate unemployment and promote economic growth (Satterthwaite and Hamilton, 2017; European Commission, 2010). This policy interest on high growth firms (HGFs), draws on a number of seminal studies emerging in the late 1970s and early 1980s In this study we do not argue for or against the policy of picking winners, instead we contribute to develop our understanding of high-growth in a crises scenarios An expanding number of researches question the wisdom of picking-winners and conclude that there is weak evidence to justify and support specific public policy measures (Anyadike-Danes et al 2015).

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