Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 114: High-growth firms: Not so vital after all?

Sven-Olov Daunfeldt (), Daniel Halvarsson and Oana Mihaescu ()
Additional contact information
Sven-Olov Daunfeldt: HUI Research, Postal: SE-103 29 Stockholm, Sweden and Dalarna University, SE-791 88 Falun, Sweden
Daniel Halvarsson: RATIO - Näringslivets Forskningsinstitut, Postal: Box 3203, SE-103 64 Stockholm, Sweden
Oana Mihaescu: HUI Research, Postal: SE-103 29 Stockholm, Sweden and Dalarna University, SE-791 88 Falun, Sweden

Abstract: High-growth firms have received considerable interest recently since they create most of the new jobs in the economy. The purpose of our paper is to investigate the characteristics of high-growth firms prior to their growth period, and whether these characteristics differ across industries. Using data on a large sample of limited liability firms in Sweden for the period 2007-2010, we find that high-growth firms do not have the characteristics that we typically associate with successful firms. On the contrary, our results indicate that high-growth firms have low profits and a weak financial position. This might explain why studies have found that high-growth firms are seldom capable of sustaining their high growth rates in subsequent periods, and thus question policies that are targeted towards these companies.

Keywords: entrepreneurship; firm growth; gazelles; high-growth firms; high-impact firms; innovation

JEL-codes: L11; L25

30 pages, September 21, 2015

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