Firms that prosper in all weathers: surviving recessions and plagues

Abstract

Purpose: Whether they support long-term growth companies, entrepreneurial firms or turnarounds, top teams need to make bold strategic investment choices in times of boom, bust or pandemic This paper aims to discuss firm strategies, as evidenced by their investment choices, over a 21-year period during which they led firms committed to growth through times of crisis and disruption Design/methodology/approach: The starting point for this research is Fortune magazine’s 100 Fastest Growing Companies, published in 2018 and updated in 2019 The list is based on the magazine’s ranking of the world’s top three-year performers in revenues, profits and stock returns for the four quarters preceding publication Inclusion on the list is all about growth, not starting size (the smallest and not renown) The classification of firms by industry sector follows Fortune’s nomenclature Comparing these firms with industry peers in the same period, the authors look at Fortune’s 100 Fastest-Growing Companies of 2018 from the vantage point of their financials from 1999 to 2017, years that included the tech boom and bust, the mortgage meltdown and the Great Recession This period also saw a relatively long expansion which was, paradoxically, punctuated by a trade war with China and recession fears that have impacted spending for growth Only 32 of Fortune’s 2018 list made it to Fortune’s 100 Fastest Growing Companies of 2019 The authors call them the Persistent 32 and examine their investment and performance metrics from 2018 through 2020 Findings: The Persistent 32 – companies that have survived multiple recessions, including the COVID-19 recession, and continue to grow – have lessons to teach, although there is no silver bullet or secret formula, even within the same industry It was found that in the group of 32, the average company lifespan is 28 75 years and astute, decisive leadership matters Companies that persist make unique, strategic resource choices They postpone expenditures on marketing and sales, fixed assets or RDthey comb the evidence for spending and performance shifts in good times and bad from 1999 to 2020;they categorize firm strategies by spending patterns versus industry;they examine the findings for insights;and finally, the authors identify key actions that set still growing firms apart © 2020, Emerald Publishing Limited