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What makes a high-growth firm? A dynamic probit analysis using Spanish firm-level data

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  • Paloma Lopez-Garcia

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  • Sergio Puente

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Abstract

It is well established that a small number of firms, known as fast-growth firms or Gazelles, create most new jobs. Despite the importance of this topic from a policy point of view, most studies are descriptive and explore a limited number of characteristics of fast-growth firms. The existence of some correlation between two or more of the determinants of fast growth could yield, however, spurious results. To avoid that problem, this paper performs a multivariate analysis of the determinants of fast growth using a panel of Spanish firms. The variables explored include sector of activity, region and newness of the firm as well as access to external finance and firms’ human resource practices. We control for the presence of unobserved time-invariant, firm-specific heterogeneity as well as for the possible existence of state dependence. We find that past extreme growth episodes increase the probability of current fast growth, which is in contrast to previous findings on the topic. We also find that human resource practices, such as employing qualified personnel or the mix of contracts offered, are important determinants of fast growth. Lastly, newness and access to credit are found to be important to explain firm growth, but they are not significant determinants of fast or extreme employment growth, thereby reflecting the existence of non-linearities in the growth process of firms. Copyright Springer Science+Business Media, LLC. 2012

Suggested Citation

  • Paloma Lopez-Garcia & Sergio Puente, 2012. "What makes a high-growth firm? A dynamic probit analysis using Spanish firm-level data," Small Business Economics, Springer, vol. 39(4), pages 1029-1041, November.
  • Handle: RePEc:kap:sbusec:v:39:y:2012:i:4:p:1029-1041
    DOI: 10.1007/s11187-011-9321-z
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    References listed on IDEAS

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    Cited by:

    1. Ossi Pesämaa, 2017. "Personnel- and action control in gazelle companies in Sweden," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(1), pages 107-132, February.
    2. Enrique Moral-Benito, 2018. "Growing by learning: firm-level evidence on the size-productivity nexus," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 65-90, March.
    3. repec:spr:empeco:v:55:y:2018:i:2:d:10.1007_s00181-017-1290-x is not listed on IDEAS
    4. Cristina Fernández & Roberta García & Paloma Lopez-Garcia & Benedicta Marzinotto & Roberta Serafini & Juuso Vanhala & Ladislav Wintr, 2017. "Firm growth in Europe: An overview based on the COMPNET labour module," BCL working papers 107, Central Bank of Luxembourg.
    5. Taelim Choi & Anil Rapusinga & John C. Robertson & Nancy Green Leigh, 2017. "The Effects of High Growth on New Business Survival," The Review of Regional Studies, Southern Regional Science Association, vol. 47(1), pages 1-23, Winter.
    6. Sven-Olov Daunfeldt & Daniel Halvarsson, 2015. "Are high-growth firms one-hit wonders? Evidence from Sweden," Small Business Economics, Springer, vol. 44(2), pages 361-383, February.
    7. Neil Lee, 2014. "What holds back high-growth firms? Evidence from UK SMEs," Small Business Economics, Springer, vol. 43(1), pages 183-195, June.
    8. Giorgio Barba Navaretti & Davide Castellani & Fabio Pieri, 2014. "Age and firm growth: evidence from three European countries," Small Business Economics, Springer, vol. 43(4), pages 823-837, December.
    9. Demir, Robert & Wennberg, Karl & McKelvie, Alexander, 2016. "The Strategic Management of High-Growth Firms: A Review and Theoretical Conceptualization," Ratio Working Papers 273, The Ratio Institute.
    10. Agustí Segarra & Mercedes Teruel, 2014. "High-growth firms and innovation: an empirical analysis for Spanish firms," Small Business Economics, Springer, vol. 43(4), pages 805-821, December.
    11. repec:spr:eurasi:v:8:y:2018:i:2:d:10.1007_s40821-017-0074-8 is not listed on IDEAS
    12. José Miguel Giner & María Jesús Santa-María & Antonio Fuster, 2017. "High-growth firms: does location matter?," International Entrepreneurship and Management Journal, Springer, vol. 13(1), pages 75-96, March.
    13. Minghao Li & Stephan J. Goetz & Mark Partridge & David A. Fleming, 2016. "Location determinants of high-growth firms," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 28(1-2), pages 97-125, January.
    14. Sven-Olov Daunfeldt & Niklas Elert & Dan Johansson, 2014. "The Economic Contribution of High-Growth Firms: Do Policy Implications Depend on the Choice of Growth Indicator?," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 337-365, September.
    15. Goedhuys-Degelin M.D.L. & Sleuwaegen L., 2015. "Human capital, innovation and the distribution of firm growth rates," MERIT Working Papers 013, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    16. Besnik A. Krasniqi & Sameeksha Desai, 2016. "Institutional drivers of high-growth firms: country-level evidence from 26 transition economies," Small Business Economics, Springer, vol. 47(4), pages 1075-1094, December.
    17. repec:eco:journ3:2017-04-18 is not listed on IDEAS
    18. Åstebro, Thomas & Tåg, Joacim, 2015. "Jobs Incorporated: Incorporation Status and Job Creation," Working Paper Series 1059, Research Institute of Industrial Economics.
    19. repec:elg:eechap:18031_8 is not listed on IDEAS
    20. Cristiano Antonelli & Francesco Crespi & Giuseppe Scellato, 2018. "Productivity growth persistence: firm strategies, size and system properties," Chapters,in: The Evolutionary Complexity of Endogenous Innovation, chapter 8, pages 176-202 Edward Elgar Publishing.
    21. Cristina Guillamón & Enrique Moral-Benito & Sergio Puente, 2017. "High growth firms in employment and productivity: dynamic interactions and the role of financial constraints?," Working Papers 1718, Banco de España;Working Papers Homepage.

    More about this item

    Keywords

    High-growth firms; Job creation; Panel firm-level data; Dynamic probit analysis; J23; L11; L25; L26;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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