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Sleeping Gazelles: High Profits but No Growth

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  • Bornhäll, Anders

    (HUI Research)

  • Daunfeldt, Sven-Olov

    ()
    (HUI Research)

  • Rudholm, Niklas

    (HUI Research)

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.

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Bibliographic Info

Paper provided by HUI Research in its series HUI Working Papers with number 91.

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Length: 31 pages
Date of creation: 29 Apr 2013
Date of revision:
Handle: RePEc:hhs:huiwps:0091

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

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References

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. In Search of the Celtic Gazelle.
    by brianmlucey in Brian M. Lucey on 2013-11-09 08:20:29
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Cited by:
  1. Bornhäll, Anders & Daunfeldt, Sven-Olov & Rudholm, Niklas, 2014. "Employment Protection Legislation and Firm Growth: Evidence from a Natural Experiment," HUI Working Papers 102, HUI Research.

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