Fast-growing Firms Research Articles

Heterogeneity in bubble experience across firms: an examination of the tech bubble

ABSTRACT We study heterogeneity in bubble experience across individual stocks. Applying the date-stamping technique and using the tech bubble in late 1990s as our laboratory, we find that tech firms vary in whether, when and how long they experience bubbles. In multivariate regressions, we find that bubbles are more likely to happen and they on average last longer in more liquid stocks, in smaller firms, in fast-growing firms and in firms with higher ownership by institutional non-blockholders rather than blockholders.

Help wanted: the drivers and implications of labour shortages

ABSTRACT Labour shortages have become prevalent across advanced economies. Yet, little is known about which firms are more likely to face them or about the impact they have on the labour market. We create a firm-level dataset spanning 28 EU countries, 283 regions and 18 sectors, contributing to closing this gap. We find that structural factors play the dominant role. Firms in regions with limited labour supply as well as innovative and fast-growing firms are particularly prone to face labour shortages. Moreover, shortages tend to aggravate at business cycle peaks. In a second stage, we empirically determine the impact of labour shortages on wages and hiring. Firms with higher shortages pay a wage growth premium to keep and attract workers, increasingly so when they face excess demand. At the same time, these are the firms that hire less than the average.

To win the marketplace, you must first win the workplace: CEO ability, CSR, and firm performance: evidence from fast-growing firms in Asia–Pacific

To win the marketplace, you must first win the workplace: CEO ability, CSR, and firm performance: evidence from fast-growing firms in Asia–Pacific

Обновление технологической базы производства и процентная политика

The continuing trajectory of the development of the Russian economy does not lead to overcoming Russia’s lag behind the leading countries in terms of labor productivity. Technological inertia is one of the reasons for this lag. In the modern economy, unicorn companies play an important role in updating the technological base of production. There are fast-growing companies in Russia, but they don’t become unicorns. Unprofitable organizations and zombie companies pull off a significant part of the demand and hinder the continuation of the expansion of fast-growing companies. In a number of industries, the risk of investing in new technologies increases due to the low utilization of existing capacities. These circumstances limit the possibilities of boosting investments by lowering real interest rates. Such a measure can increase the availability of loans for firms focused on technological innovation. However, at the same time, it can prolong the existence of zombie firms that restrain the development of innovative enterprises. Time-limited licensing of the creation of new capacities is advisable in industries with strong economies of scale. This will help the formation of leading companies in the technological transformation of the Russian economy. The central bank’s measures to restrict evergreen lending to zombie firms can help transform fast-growing firms into unicorn companies.

Designing Stress Tests for UK Fast-Growing Firms and Fintech

This paper captures advances in prudential regulation and supervision for challenger banks and fintech in the UK. It presents a critical analysis of the prudential supervisory approaches towards fintech. The focus is placed on fast-growing firms (FGFs), building on the review performed by the Prudential Regulation Authority (PRA) of the Bank of England (BoE) in 2019. Specifically, it comprises a critical examination of the underlying regulatory framework in relation to the robustness of stress testing practices, as part of the review of FGF risk management practices and the weakness identified in the Internal Capital Adequacy Assessment Process (ICAAP). The economic analysis of law comprises the underlying methodology, using economic theory to analyse regulation and its effectiveness regarding fintech regulation and supervision. Recommendations for enhancements towards supervisory practices about the prudential governance and management of FGFs and fintech are included, with advances to the underlying regulatory framework in the UK. Overall, this critical legal research examines the supervisory practices of FGFs and fintech in the UK, under the lens of prudential regulation and risk management approaches, focusing on the design, development and implementation of the stress testing tool and scenario practices.

Обновление технологической базы производства и процентная политика

The continuing trajectory of the development of the Russian economy does not lead to overcoming Russia’s lag behind the leading countries in terms of labor productivity. Technological inertia is one of the reasons for this lag. In the modern economy, unicorn companies play an important role in updating the technological base of production. There are fast-growing companies in Russia, but they don’t become unicorns. Unprofitable organizations and zombie companies pull off a significant part of the demand and hinder the continuation of the expansion of fast-growing companies. In a number of industries, the risk of investing in new technologies increases due to the low utilization of existing capacities. These circumstances limit the possibilities of boosting investments by lowering real interest rates. Such a measure can increase the availability of loans for firms focused on technological innovation. However, at the same time, it can prolong the existence of zombie firms that restrain the development of innovative enterprises. Time-limited licensing of the creation of new capacities is advisable in industries with strong economies of scale. This will help the formation of leading companies in the technological transformation of the Russian economy. The central bank’s measures to restrict evergreen lending to zombie firms can help transform fast-growing firms into unicorn companies.

Agglomeration Externalities of Fast-Growing Firms: The Case of the Manufacturing Sector in China

Agglomeration Externalities of Fast-Growing Firms: The Case of the Manufacturing Sector in China

An appreciative theorizing approach to gazelle enterprises assisted by the Arica Business Center

The role played by gazelles in economic development processes is a topic of growing interest in the scientific and business community. Empirical evidence agrees that gazelles and fast-growing firms are innovative, transformative economic structures with capabilities to promote economic growth. This paper examines the role of a group of gazelle firms assisted in Arica that positively weigh the cost-benefit ratio of the Business Center program in Chile. This path poses an exercise in “appreciative theorizing” —as Richard Nelson (2018) calls it— and examines various factors of growth that cannot be explained by economic models in equilibrium.

Entrepreneurial Ecosystems, New Business Formation, and Scale-up Activity: Evidence from 286 Chinese Cities

Abstract This paper examines the effects of the quality of entrepreneurial ecosystems on new business formation and scale-up activity in China at the city-industry level. Accounting for only large and fast-growing firms, we focus on productive entrepreneurship which creates economic wealth. Based on a newly constructed panel dataset for 29 manufacturing industries and 286 prefecture-level cities of China during the period 1998–2009, we find that entrepreneurial ecosystem components, including access to finance, knowledge, marketization, local market demand, and entrepreneurial culture, are important determinants in explaining the differences in entrepreneurial activity across city-industry clusters and over time. Analysing a dynamic period in China’s industrialization with large regional variation in economic development, we show that the relative importance of the ecosystem components in shaping entrepreneurial activity changes over time when regions develop. In addition, we show that interaction between the ecosystem components – indicating system strength – has additional power in explaining new business formation and scale-up activity.

The capital structure of domestic and foreign denominated debt: Firm-level evidence from South Korea

This study uses a two-part model with firm-level fixed effects to examine the decisions of Korean firms to issue domestic and foreign denominated debt (extensive margin), and among those firms using external finance, their level of leverage (intensive margin) in each denomination. We find that less profitable and fast-growing firms adopt a pecking order in their leverage decisions, which is evident in their preference for domestic, relative to foreign denominated debt. Interestingly, this relation is shown to be stronger following the 2007 financial crisis and suggests demand side factors are important to leverage decisions. Our results also indicate the fixed costs of issuing debt are important to debt use along the extensive margin and vary in strength by denomination. The use of foreign debt, with its higher fixed costs, is shown to be largely determined by factors associated with these costs.

Disruption and Credit Markets

In the past thirty years, defaults on corporate bonds have been substantially higher than the historical average. We show that this increase in credit risk can be largely attributed to an increase in the rate at which new and fast-growing firms displace incumbents (a phenomenon sometimes referred to as 'disruptive innovation'). Industries with a lager presence of firms newly listed on the stock market, as well as industries that receive funding from venture capital, have a higher loss of revenue market share for established firms and subsequently see a rise in corporate bond defaults. Patent filings by individuals as opposed to corporations also predict defaults. These results are not affected by inclusion of controls for industry exposure to offshore manufacturing.

Vacancies, employment outcomes and firm growth: Evidence from Denmark

We use comprehensive data from Denmark that merge online job advertisements with a matched employer-employee dataset and a firm-level dataset with information on revenues and value added to study the relationship between vacancy-posting and various firm outcomes. Vacancy-posting is associated with a 4.4 percentage point increase in a firm’s hiring rate and 85% of the additional hiring occurs within two months. The response of hiring from employment is twice as large as the response of hiring from non-employment. Firms that are smaller, low-wage and fast-growing are associated with larger hiring responses and that response materializes faster at larger firms, low-wage firms and fast-growing firms. We also find that separations are associated with subsequent vacancy-posting and this effect is stronger for separations to employment, consistent with replacement hiring and the presence of vacancy chains. Growth in revenue and value added strongly predict vacancy-posting, with negative shocks having a stronger effect than positive shocks and larger shocks having less-than-proportional responses.

Does performance-sensitive debt mitigate debt overhang?

We model the expansion decision of a levered firm. Straight debt distorts both timing and scaling: the firm invests less and later than its all-equity financed counterpart. The inclusion of performance sensitivity in the debt contract mitigates such distortions. Moreover, performance sensitivity is consistent with firm value maximization within a standard trade-off theory of capital structure. As a result, our model rationalizes the widespread use of performance sensitive debt (PSD), especially amongst fast growth firms.

Exponential Organizations Hypergrowth Strategies and Firm Performance: The Moderating Role of Firm Size and Marketing Spending

With the increasing concerns of hypergrowth in order to compete in the international markets and survive, this study aids all firms in various industries, entrepreneurs and decision makers and draw their attention to business models and hypergrowth strategies that are applied by the fast-growing firms in the world. This study investigates the impact of hypergrowth strategy- leveraging assets that developed by Salim, (2014) and firm performance in exponential organizations; The sample size tested constituted of (34) exponential organizations form the fortune 500 and multiple regressions via Stata version 15 was applied for the time period of (2016-2019). Preliminary analysis was conducted to check the assumptions related to the regression models which include unit root, autocorrelation, residuals normality and heteroskedasticity issues. The results showed significant positive relationships between Growth in Fixed Assets (leveraging Assets strategy) and firm performance measured by ROA and ROE whereas, the moderating role of marketing spending and firm size showed insignificant impact in the relationship.

Exponential Organizations Hypergrowth Strategies And Firm Performance: The Moderating Role of Firm Size And Marketing Spending

With the increasing concerns of hypergrowth in order to compete in the international markets and survive, this study aids all firms in various industries, entrepreneurs and decision makers and draw their attention to business models and hypergrowth strategies that are applied by the fast-growing firms in the world. This study investigates the impact of hypergrowth strategy- leveraging assets that developed by Salim, (2014) and firm performance in exponential organizations; The sample size tested constituted of (34) exponential organizations form the fortune 500 and multiple regressions via Stata version 15 was applied for the time period of (2016-2019). Preliminary analysis was conducted to check the assumptions related to the regression models which include unit root, autocorrelation, residuals normality and heteroskedasticity issues. The results showed significant positive relationships between Growth in Fixed Assets (leveraging Assets strategy) and firm performance measured by ROA and ROE whereas, the moderating role of marketing spending and firm size showed insignificant impact in the relationship.

Fast-growth firms and successful environmental entrepreneurs in emerging countries

Growth is a broad area and many aspect of growth is under research especially in smaller and entrepreneurial firms. Many research show that growth and fast growth happens randomly and is not a continuous phenomenon. In this study, we investigate how successful entrepreneurs grow their firms. The investigation involved ten fast-growth firm cases in Iran -as an emerging economy- in different industries. The research is qualitative and data gathered through semi structured in-depth interviews. After coding, all interviews are mapped. By using Decision Explorer® all causal maps are analyzed. Analysis show that fast growth is a direct outcome of entrepreneurial marketing (EM) practices and indirectly influenced by serendipity. Serendipity is an element observed in many firms that generally occurs at the initial phase of firm formation and could bring great opportunities but indirectly associated with fast-growth. However, serendipity itself is not important but the ability to recognize and exploit opportunity is a crucial activity that entrepreneurs are really great at it. The ability of entrepreneurs to exploit serendipitous opportunities and use entrepreneurial marketing practices in terms of innovative products and activities/process lead to fast growth. Other elements, such as network, innovation, and perseverance, could either directly or indirectly influence growth.

The persistent link between growing talent and growing the top line: lessons from fast-growing firms in the COVID-19 recession

We examined Fortune Magazine’s 100 Fastest Growing Companies of 2018 and found 32 firms still listed in Fortune’s updated 2019 list. The "Persistent 32" are still growing in the first half of 2020, as the COVID-19 recession continues. As a whole they have added to headcount over the long expansion (2013–2019) and continue to hire aggressively. We focus on how a commitment to building talent and growth sets them apart in this pandemic, how they represent a focus on human capabilities; how their investments contribute to organizational change and renewal; and how the leader plays new roles as marketplace insight visionary and chief safety officer. We draw lessons from the "Persistent 32" and outline steps top teams can take now to build talent and grow the firm.

A commentary on the impacts of 'Great Lockdown' and its aftermath on scaling firms: What are the implications for entrepreneurial research?

This commentary argues that scaling fast growth firms drive economic development, even in recessionary periods. While the coronavirus induced the ‘Great Lockdown’ and its aftermath poses particular challenges, we argue that the crisis presents the entrepreneurial scholarly community with an opportunity to re-orientate our research. Rather than more narratives of business success in the face of adversity, the Great Lockdown presents us with a fresh opportunity to examine how scaling is affected by context, by luck and by the porous nature of business growth. In so doing, our hope is that it will encourage our community to adopt a more proactive agenda to support policy makers and entrepreneurs.

Agglomeration externalities of fast-growth firms

ABSTRACT Small groups of fast-growth firms contribute disproportionately to job creation, yet little is known about their broader impact on the economy. This paper provides the first evidence of the agglomeration externalities of fast-growth firms, examining their economic impact on non-fast-growth firms operating within the same region (NUTS-2) and industry (SIC2), and through backward and forward linkages. Using comprehensive firm-level data on UK firms between 1997 and 2013, the analysis shows robust evidence of positive spillovers of fast-growth firms on the labour productivity of non-fast-growth firms in the same industry and region. However, the externalities in relation to the employment growth of non-fast-growth firms are negative, suggesting labour poaching and local competition effects.

Hızlı Büyüyen KOBİ lerde İç Girişimcilik: Ankara İlinde Bir Araştırma (Internal Entrepreneurship in Fast Growing SME s: A Research in Ankara Province)

Purpose – Since today's economy is global, dynamic and competitive, the survival and growth of firms are considered as necessities. Growth requires many middle and high level decisions for SMEs. Growth in SMEs is a phenomenon that covers all middle and senior managers. Entrepreneurs in SMEs; it is a decision mechanism that directly affects growth without realizing it or being aware of it. It is believed that the level of internal entrepreneurship in SMEs directly affects the decision making process of the firm and enables rapid growth. From this point of view, internal entrepreneurship will be able to provide support to government agencies and financial institutions in the development of policies that encourage firm growth, particularly in the development of SME growth strategies. With this in mind, the aim of this study is to determine the differences between the level of internal entrepreneurship of medium and high level officials of fast-growing SMEs and non-fast-growing SMEs. Design/methodology/approach – For the purpose of the study, a survey was conducted in Ankara with KOSGEB registered SMEs. Internal entrepreneurship levels were determined by examining the rapid growth of 429 firms. Internal entrepreneurship levels of fast-growing firms and non-fast-growing firms were compared. The t-test was used for analysis. Findings – As a result of the analysis, it is seen that the level of innovation and proactive behavior of fast growing SMEs is higher than those that do not grow fast. Discussion – Within the scope of the research, innovation and proactive behavior development in SMEs will support rapid growth. This will provide an effective increase in employment and an advantage in global competition.