Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 215: Identifying High-Growth Firms

Daniel Halvarsson ()
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Daniel Halvarsson: Ratio, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden

Abstract: This paper investigates the role(s) of high-growth firms (HGFs) in the robust growth-rate distribution. HGFs are identified as firms for which the growth-rate distribution exhibits power-law decay. In contrast to the traditional means of identifying HGFs, a distributional approach eliminates the need to specify an arbitrary growth rate or percentage share. The latter approach is illustrated by the growth-rate distribution for Swedish data on incorporated firms at the aggregate level and at the 2-digit industry level. The empirical results indicate that a power law is sometimes present in the growth-rate distribution and suggest that HGFs are rarer than previously thought.

Keywords: High-growth firms; Gazelles; Firm growth-rate distribution; Laplace distribution; Power law

JEL-codes: D22; L11; L25

32 pages, August 21, 2013

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