Episodes Of High Growth Research Articles

The Impacts of Resource Orchestration on High Growth Episodes

The Impacts of Resource Orchestration on High Growth Episodes

Learning to ride the high growth “Rollercoaster”: the role of publicly funded business accelerator programmes

AbstractHigh growth firms (HGFs) are a vital determinant of regional economic competitiveness. This paper examines the effectiveness of a Welsh publicly funded business accelerator programme (BAP) designed to nurture HGFs via relational support measures. The paper teases out both the support requirements sought by high growth entrepreneurs, together with the perceived effectiveness of the programme’s offering. Hitherto, the literature has been silent in terms of the mental well-being and psychological resilience of founders of HGFs. This study discovered how mental well-being and psychological resilience of entrepreneurs was very acutely and detrimentally affected when experiencing periods of rapid firm growth. The research also uncovered a disconnect between the support needs of HGFs and those provided by BAPs. To help develop the capabilities and durability of entrepreneurs, “growth readiness” coaching together with psychological resilience training seem appropriate policy measures to help entrepreneurs successfully navigate turbulent episodes of high growth.

Productivity and HGEs: resilience and recovery from the COVID-19 pandemic

ABSTRACT The impact of crises on firm performance has been studied widely. This paper explores the relationship between firms’ reaction to COVID-19 (in employment) and the adoption of digital technologies, taking into account their productivity, digitalisation level and high-growth episodes before the crisis. We match the EIB Group Survey of Investment and Investment Finance with ORBIS database for 27 EU Member States and the United Kingdom. We find that firms with higher productivity levels are less prone to decrease the number of employees in the short and long term due to the pandemic. High-growth enterprises are less likely to expect a reduction in the number of employees in the long term. Moreover, firms in highly digitalised sectors have a lower probability to reduce the number of employees. Finally, our results suggest that COVID-19 leads firms to increase their use of digital technologies, especially those that were already more digitalised.

Economic shocks and democratic consolidation: Historical evidence from party-level electoral volatility in France

The emergence of a stable party system is a central aspect of democratic consolidation. Building a novel historical dataset, we analyze how economic growth affected the party-level electoral volatility during the consolidation of the French democracy over the Third Republic (1870-1940). We document an asymmetric effect in that positive economic shocks produced electoral stability, while negative shocks had not the expected destabilizing effect. Moreover, a positive shock had a disproportionally stabilizing effect during economic prosperity, four times stronger than during an average economic conjuncture. As France experienced strong positive shocks over this period, our results imply that the party system consolidation may have been driven by a few exceptionally high growth episodes. We also find evidence suggesting that positive shocks developed voters’ support for institutionally stable parties.

The growth process of IPO firms

This study explores initial public offering (IPO) firms’ growth processes. Building on the idea that going public relaxes financial constraints and thus facilitates growth, this study uses an international sample of European IPO firms matched with comparable non-IPO firms to investigate whether and in which dimensions IPO firms grow faster than non-IPO firms do. Consistent with the Penrosean theory of growth, the results show that IPO firms grow first by acquiring fixed assets immediately after the listing and then by acquiring an additional workforce, corresponding to the resource acquisition stage of growth. The performance-enhancing stage of growth, during which IPO firms grow in sales, occurs later and culminates three years after an IPO. In addition, IPO firms are more likely to experience high-growth episodes in sales, but not in employment, than non-IPO firms. Overall, this study highlights the role of financing decisions in growth processes.

PIDE’S Charter of Economy (Policy)


 
 
 
 
 Despite experiencing extreme economic and political instability, Pakistan has still been unable to break with the ramshackle of its unstable development enigma. Pakistan’s economic indicators over the last seventy-two years have fluctuated widely: the sixties, the eighties, and a significant part of the 2000s registered high growth episodes (over 6.0 per cent), with low growth observed in other periods. In the last twelve years (2008-20), growth averaged 3.25 per cent annually, crossing 5.0 per cent just twice (see Figure 1) Why so much volatility? Why does the economy rudderless and lacking direction?
 
 
 
 
 
 
 
 
 
 
 
 
 

In search of the next growth episode: How firms catalyse and sustain periods of high growth

This is an introductory article to the special issue In Search of the Next Growth Episode: How Firms Catalyse and Sustain Periods of High Growth. The article reviews alternative streams of research on firm growth, including ‘random growth’, ‘responsive growth’ and ‘resourceful growth’. The themes of, and contributions to, the Special Issue are presented. Finally, we identify a number of directions for future research, including the importance of unpacking the drivers and causes of high growth episodes (HGEs), amplifying the role of the leader in research on firm growth, while questioning the desired outcomes and consequences of growth. We assert that there is still much to learn about firm growth. Our hope is that this special issue inspires new approaches and an enlarged understanding in this domain.

Dynamic Scaling for Persistent High Growth

High-growth firms (HGFs) represent a very small proportion of all firms, yet they are responsible for most new jobs. Previous studies on HGFs, while valuable and advancing the field, have been mostly limited to explaining single three-year episodes of high growth. This leaves a noticeable gap in terms of explaining how firms that show high growth over extended periods of time are able to do so. Using a longitudinal qualitative design to study one of the fastest growing companies in the Netherlands and a persistent fast grower for more than a decade, we identify the process of dynamic scaling as being a key foundation for persistent HGFs. This enables us to demonstrate that what makes high growth sustainable over extended periods of time are the strategic leaders’ consistent and deliberate efforts to scale the organization. We find that strategic leaders are able to repeatedly scale the organization by deploying and adapting four key managerial capabilities that are specific to persistent HGFs. By identifying the process of dynamic scaling and the underlying four key managerial capabilities, we are able to move beyond generic financial and performance indicators of persistent HGFs and, instead, explicate the contextual specificities of these firms, which contribute to their extended success.

High growth episodes among R&D intensive firms: Evidence for Europe, US and Japan

The purpose of this article is three-fold: first, it tests whether inter-industry R&D spillovers are positively associated with the likelihood of experiencing high growth episodes among R&D intensive firms in Europe, US and Japan; second, it tests whether such a relationship is conditional on their level of absorptive capacity (ACAP); third, it tests whether the acquisition of foreign patents, an additional channel to access external knowledge, trigger high growth episodes among a sub-set of R&D intensive firms. For the empirical analysis, we focus on R&D intensive manufacturing firms observed between 2002 and 2017, located in Europe, US and Japan. The empirical findings support the hypotheses suggesting that: a) inter-industry R&D spillovers are associated with the likelihood of experiencing high growth episodes; b) ACAP conditions the relationship between inter-industry R&D spillovers and the likelihood of experiencing high growth episodes and c) shares of foreign patents are positively associated with the likelihood of experiencing high growth episodes among high-tech R&D intensive firms. JEL codes: C41, L25, O33.

Capacity constraints as a trigger for high growth

High-growth enterprises (HGEs) have a large economic impact but are notoriously hard to predict. Previous research has linked high-growth episodes to the configuration of lumpy indivisible resources inside firms, such that high capacity utilisation levels might stimulate future growth. We theorize that firms reaching critically high capacity utilisation levels reach a “trigger point” involving either broad-based investment in further growth or shrinking back to previous levels. We analyze EIBIS survey data (matched to ORBIS) which features a question on time-varying capacity utilisation. Overcapacity is a transitory state. Firms enter into overcapacity after a period of the rapid growth of sales and profits, and the years surrounding overcapacity have higher employment growth rates. Firms operating at overcapacity make incremental investments (e.g. capacity expansion, process improvements and modern machinery) rather than investing in R&D and new product development. We find support for the “fork in the road” hypothesis: for some firms, overcapacity is associated with launching into massive investments and subsequent sales growth, while for other firms, overcapacity is negatively related to both investments and sales growth.

Drivers of exceptional job creation – a dynamic probit approach using portuguese firm-level data

It is a well-established fact that a small number of firms, known as Gazelles, drive a disproportionately large amount of net job creation. This fact has attracted considerable attention from researchers, who have been focusing on trying to understand what differentiates this type of firms from their slow-growth peers. In this paper, we expand the ongoing survey on Gazelles by focusing on the Portuguese case. Particularly, we examine how is high-growth associated with the firms´ age, access to equity and external finance and the workforce human capital. We also test whether high-growth is linked with the firms´ ability to export and innovate through R&D. In this paper, we also explore whether high-growth episodes display some form of state dependency by adding a dynamic component in the form of the lagged value of the Gazelle status. As for results, we find no supporting evidence in favour of persistency, as past growth events are negatively associated with current growth. This is in line with the recent literature on the topic that points to the lack of persistence in the growth process as a consistent enough result worth of being considered as a stylized fact about Gazelles. Nevertheless, we do find that younger firms are more likely to grow at the fastest pace and that human capital is an important determinant for high-growth. Results also point to the fact that fast-growing firms were not hampered by lack of access to adequate external funding during the period, and that they relied primarily on equity to finance their growing needs. Moreover, we find that, once firms’ experience in the market is considered, being an exporter is a relevant factor when it comes to high-growth events. Similarly, the innovative capacity of firms seems to be crucial in outstanding job creation episodes. Finally, our results suggest that it is an enhanced innovative capacity, the availability of equity, as well as the ability of experienced firms to export that might set the difference between the average growth performance and the exceptional growth performance, pointing to nonlinearities in the growth process of firms.

Accounting for the Rising Value Added in Services Compared to That in Agriculture in African Economies

Structural transformation has been a central feature of economic development, marked by sectoral shifts over time. The literature predicts shifts of output and labor first from agriculture to manufacturing, followed by manufacturing to services at later stages of development. This pattern is consistent with the experience of advanced economies that have experienced secular declines in manufacturing employment and sectoral value added since the 1970s. It is also consistent with the experience of East Asian economies whose striking growth performance in recent years has been underpinned by dynamism in manufacturing. However, the recent relatively high-growth episode in many African economies has been accompanied by a declining share of agriculture and rising services share, while the manufacturing sector?s share of output has not only remained low but also declining. This paper investigates the key factors accounting for the rising value added in services compared to that in agriculture in Africa between 1990 and 2011, during which the continent experienced a relatively high economic growth. Using the OLS and IV-SLS regression methods, we find that value added in services and agriculture are accounted differentially by the level of economic development (quartic relationships), other macroeconomic factors, different levels of education, natural resources, different forms of globalization (economic, social and political), domestic credit, population size, ICT, and availability of arable land. We conclude with policy implications.

High Growth Firms in Employment and Productivity: Dynamic Interactions and the Role of Financial Constraints?

Using a panel of Spanish firms over the period 2002-2012, we investigate the interactions between high growth episodes in terms of size and productivity. We find that high growth in productivity (size) increases the likelihood of high growth in size (productivity). However, the effect from size to productivity is smaller than the effect from productivity to size. We also explore the potential role of firm-level financial constraints using information from the Central Credit Register (CIR) of Banco de Espana. Our results indicate that credit constraints hamper high growth episodes in terms of both size and productivity.

Fiscal multipliers in good times and bad times

This paper estimates the magnitudes of government spending and tax multipliers within a regime-switching framework for the U.S. economy during the period 1949:1–2006:4. Our results show that the magnitudes of spending multipliers are larger during periods of low economic activity, while the magnitudes of tax multipliers are larger during periods of high economic activity. We also show that the magnitudes of fiscal multipliers got smaller for episodes of low growth, while they got larger for episodes of high growth in the post 1980 period. Analyzing the effects of government spending and taxes on consumption and investment spending indicates that the magnitude of the effects of fiscal shocks on consumption and investment is very small.

High-growth firms and productivity: evidence from the United Kingdom

There is considerable evidence that high-growth firms (HGFs) contribute significantly to employment and economic growth. However, the literature so far does not adequately explore the link between HGFs and productivity. This paper investigates the empirical link between total factor productivity (TFP) growth and HGFs, defined in terms of sales growth, in the United Kingdom over the period 2001–2010, by examining two related research questions. Firstly, does higher TFP growth lead to HGF status and secondly, does HGF experience help firms achieve faster TFP growth? Our findings reveal that firms in both the manufacturing and services sectors are more likely to become HGFs when they exhibit higher TFP growth. In addition, firms that have had HGF experience tend to enjoy faster TFP growth following the high-growth episodes. Policy implications are drawn based on the self-reinforcing process of the high-growth phenomenon that is revealed by our results.

Persistence, survival, and growth: a closer look at 20 years of fast-growing firms in Austria

for survival, persistence and growth. HIFs show a much higher persistence than HGFs. The average growth rate after the high growth episode is quite modest for both HIFs and HGFs. Policy implications of the ndings are discussed.

Inclusive Growth: An Application of the Social Opportunity Function to Selected African Countries

The inclusiveness of growth depends on the extent of access to economic and social opportunities. This paper applies the concept of social opportunity function to ascertain the inclusiveness of growth episodes in selected African countries. Premised on the concept of social welfare function, inclusive growth is associated with increased average opportunities available to the population and improvement in their distribution. The paper establishes that the high growth episodes in the last decade in the selected countries came with increased average opportunities in education and health; but distribution of such opportunities varied across countries, depending on the country-specific policies underpining the growth episodes.

The Quality of the Recent High-Growth Episode in Sub-Saharan Africa

The paper explores the quality of the recent high-growth episode in sub-Saharan Africa by examining the following two questions: (i) what has been the nature and pattern of SSA growth over the past 15 years and how does it compare with previous episodes? (ii) has this growth had an impact on socially desirable outcomes, for example, improvements in health, education and poverty indicators? To do this, the paper first examines various aspects of the fundamentals of growth in SSA—levels, volatility, sources, etc.—according to various country analytical groupings. Second, it explores the extent to which the growth has been accompanied by improvements in social indicators. The paper finds that the quality of growth in SSA over the past 15 years has unambiguously improved, although progress in social indicators has been uneven.

The Quality of the Recent High-Growth Episode in Sub-Saharan Africa

The paper explores the quality of the recent high-growth episode in sub-Saharan Africa by examining the following two questions: (i) what has been the nature and pattern of SSA growth over the past 15 years and how does it compare with previous episodes? (ii) has this growth had an impact on socially desirable outcomes, for example, improvements in health, education and poverty indicators? To do this, the paper first examines various aspects of the fundamentals of growth in SSA - levels, volatility, sources, etc. - according to various country analytical groupings. Second, it explores the extent to which the growth has been accompanied by improvements in social indicators. The paper finds that the quality of growth in SSA over the past 15 years has unambiguously improved, although progress in social indicators has been uneven.

On the Autocorrelation of Growth Rates

This paper studies the serial autocorrelation of annual growth rates in employment for selected Austrian service industries over a 30-year period using quantile regression techniques. The autocorrelation of growth rates provides important information on firms growth processes. We find that the growth patterns of micro firms are strikingly different from the growth patterns of small, medium-sized and larger firms. First, we do find a positive dependency of growth on size for growing micro firms, while this relationship is negative for the other size groups. Second, growing micro firms are subject to negative autocorrelation of annual growth rates making sustained growth a very rate occurrence, while larger growing firms usually display a positive autocorrelation suggesting that high growth episodes of larger firms stretch over a longer time horizon. This indicates that the growth of micro firms in particular is characterized by a rather lumpy growth profile. Furthermore, we find that the autocorrelation patterns are asymmetric with regard to decline and growth.