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Sleeping Gazelles: High profits but no growth

  • Anders Bornhäll

    ()

    (Research, HUI, Sweden)

  • Sven-Olov Daunfeldt

    ()

    (Research, HUI, Sweden)

  • Niklas Rudholm

    ()

    (Research, HUI, Sweden)

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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Paper provided by SPRU - Science and Technology Policy Research, University of Sussex in its series SPRU Working Paper Series with number 2013-10.

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Date of creation: Oct 2013
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Handle: RePEc:sru:ssewps:2013-10
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