Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 73: Are high-growth firms one-hit wonders? Evidence from Sweden

Sven-Olov Daunfeldt () and Daniel Halvarsson
Additional contact information
Sven-Olov Daunfeldt: HUI Research, Postal: The Swedish Research Institute of Trade (HUI), Regeringsgatan 60, 103 29 Stockholm, Sweden, and Department of Economics, Dalarna University, SE-781 88 Borlänge, Sweden
Daniel Halvarsson: The Royal Institute of Technology, Division of Economics, Postal: SE-100 44, Stockholm, and The Ratio Institute, P.O Box 3203, SE-103 64, Stockholm, Sweden

Abstract: Most firms do not grow, and a small number of high-growth firms seem to create most new jobs. These firms have therefore received increasing attention among policymakers. The question is whether high-growth tends to persist? We investigate this question using data on 432,689 observations in Sweden during 1997-2008. We find that high-growth firms had declining growth rates in the previous 3-year period, and their probability of repeating high growth rates was very low. HGFs are essentially “one-hit wonders”, and it is thus doubtful whether policymakers can improve economic outcomes by targeting them.

Keywords: Gazelles; High-growth firms; Persistence; Autocorrelation; Transition Probabilities

JEL-codes: L11; L25

16 pages, November 2, 2012

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