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Is Extraordinary Growth Profitable? A Study of Inc. 500 High–Growth Companies

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  • Gideon D. Markman
  • William B. Gartner

Abstract

This research note tests whether extraordinary high growth (e.g., sales growth rates of 500 percent to 31,000 percent over five years) is correlated to firm profitability. Using longitudinal data from three separate cohorts of Inc. 500 firms (from 1992 to 1996; 1993 to 1997; and 1994 to 1998), firm growth was operationalized in terms of sales and number of employees. Controlling for industry sector and ranking on the Inc. 500 lists, analyses found that extraordinary high growth—in terms of sales and number of employees —was not related to firm profitability. Firm age, however, was significantly, and inversely, related to profitability; younger firms experience slightly higher profitability rates. Implications for management and future study of extraordinary high–growth firms are discussed.

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  • Gideon D. Markman & William B. Gartner, 2002. "Is Extraordinary Growth Profitable? A Study of Inc. 500 High–Growth Companies," Entrepreneurship Theory and Practice, , vol. 27(1), pages 65-75, January.
    • Handle: RePEc:sae:entthe:v:27:y:2002:i:1:p:65-75
    DOI: 10.1111/1540-8520.t01-2-00004
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    Cited by:

    1. Mansikkamäki, Susanna, 2023. "Firm growth and profitability: The role of age and size in shifts between growth–profitability configurations," Journal of Business Venturing Insights, Elsevier, vol. 19(C).
    2. Moon Young Kang, 2020. "Sustainable Profit versus Unsustainable Growth: Are Venture Capital Investments and Governmental Support Medicines or Poisons?," Sustainability, MDPI, vol. 12(18), pages 1-11, September.
    3. Fareed Zeeshan & Ali Zahid & Shahzad Farrukh & Nazir Muhammad Imran & Ullah Assad, 2016. "Determinants of Profitability: Evidence from Power and Energy Sector," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 61(3), pages 59-78, December.
    4. Frank Ranganai Matenda & Mabutho Sibanda, 2022. "Determinants of Default Probability for Audited and Unaudited SMEs under Stressed Conditions in Zimbabwe," Economies, MDPI, vol. 10(11), pages 1-28, November.

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