Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 91: Sleeping Gazelles: High Profits but No Growth

Anders Bornhäll , Sven-Olov Daunfeldt () and Niklas Rudholm
Additional contact information
Anders Bornhäll: HUI Research, Postal: SE-103 29 Stockholm, Sweden and Dalarna, University, Department of Economics, SE-781 88 Borlänge, Sweden and Örebro University, School of Business, SE-701 82 Örebro, Sweden
Sven-Olov Daunfeldt: HUI Research, Postal: SE-103 29 Stockholm, Sweden and Dalarna University, Department of Economics, SE-781 88 Borlänge, Sweden
Niklas Rudholm: HUI Research, Postal: SE-103 29 Stockholm, Sweden and Dalarna University, Department of Economics, SE-781 88 Borlänge, Sweden

Abstract: Among 205,322 limited liability firms in Sweden during 1997-2010, more than 10% did not hire new employees in any given 3-year period despite having high profits. Nearly one-third continued to have high profits in the next three-year period, but still no growth. Regression analysis indicates that these firms were not randomly distributed; rather they were small and young, did not belong to an enterprise group, had low own-capital as a share of total liabilities, and operated in local markets with high profit- opportunities and low competition. We conclude that it might be more beneficial to focus policy towards these firms instead of towards a few high-growth firms that, having just grown exponentially, may not be best positioned to grow further.

Keywords: Gazelles; high-growth firms; firm growth; growth barriers; job creation

JEL-codes: L11; L25

31 pages, April 29, 2013

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