Abstract
The paper investigates the role and impact of different groups of firms according to their growth type on macroeconomic aggregates at various stages of the economic cycle based on the entire population of firms in Slovenia. The applied classification of growing and fast-growing firms is based on microeconomic theory. Results exhibit that despite larger year-to-year fluctuations, firms with growth towards their long-term equilibrium contributed most to macroeconomic aggregates, i.e. employment, capital and sales, especially in times of economic prosperity. Firms with growth that shifts them closer to their short-term equilibrium proved to be more important primarily for assuring employment stability. Furthermore, we show that using single growth measures prevents us from identifying all growing firms and capturing the true contribution of particular growth groups of firms to studied macroeconomic aggregates. The paper provides both theoretical and empirical information for managers for designing different types of firm growth and enables policy makers to adopt adequate industrial policy measures.
Highlights
This paper explores growing and fast-growing firms and their type of growth during economic expansion and in periods of recession
We investigate the Slovenian economy in the 2007–2008 and 2010–2011 periods of positive economic growth and in 2009, 2012 and 2013 marked by economic crisis to show that different firm growth types prevail at various stages of the economic cycle
Journal of Business Economics and Management, 2018, 19(1): 138–153 types of growth as initially proposed by Tajnikar et al (2016) contribute to the creation of key macroeconomic aggregates through generating revenues, employment and investments at various stages of the economic cycle. In this way we show that the typology of different firm growth types according to microeconomic theory provides a deeper understanding of how different growing and fast-growing firms contribute to the creation of selected macroeconomic aggregates at different stages of the economic cycle
Summary
This paper explores growing and fast-growing firms and their type of growth during economic expansion and in periods of recession. Journal of Business Economics and Management, 2018, 19(1): 138–153 types of growth as initially proposed by Tajnikar et al (2016) contribute to the creation of key macroeconomic aggregates through generating revenues, employment and investments at various stages of the economic cycle In this way we show that the typology of different firm growth types according to microeconomic theory provides a deeper understanding of how different growing and fast-growing firms contribute to the creation of selected macroeconomic aggregates at different stages of the economic cycle. The approach to investigating the impact of growing firms and their growth types at different stages of the economic cycle adopted in this paper contributes to existing empirical research. Henrekson, Johansson 2010; Coad et al 2014; Daunfeldt et al 2014) We build on this tradition but extend the analysis to capture the magnitude of growing firms’ impact on employment in Slovenia and on revenue generation and investment. We analyse which types of firm growth play a predominant role in creating key macroeconomic aggregates at various stages of the economic cycle
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