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Do some Firms Persistently Outperform?

Author

Listed:
  • M. Capasso
  • E. Cefis
  • K. Frenken

Abstract

This study analyses persistence in growth rates of the entire population of Dutch manufacturing firms. Previous literature on firm growth rates shows that extreme growth events are likely to be negatively correlated over time. A rebound effect following an extreme growth event questions the existence of persistent outperformers, indicated by a positive correlation over time. By supplementing the quantile regression analyses with transition probability matrices, our study shows that ‘bouncing’ firms co-exist with persistent outperformers. This result is robust if we exclude firms involved in acquisitions or spin offs. Differentiating among different size classes, we find that the existence of persistent outperformers is especially pronounced in micro firms. We interpret this finding as supporting the notion of a Schumpeter Mark I regime, with small firms displaying strong heterogeneity in their growth patterns, versus a Schumpeter Mark II regime, with large firms displaying less heterogeneity of growth.

Suggested Citation

  • M. Capasso & E. Cefis & K. Frenken, 2009. "Do some Firms Persistently Outperform?," Working Papers 09-28, Utrecht School of Economics.
    • Handle: RePEc:use:tkiwps:0928
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    Cited by:

    1. Anders Bornhäll & Sven-Olov Daunfeldt & Niklas Rudholm, 2013. "Sleeping Gazelles: High profits but no growth," SPRU Working Paper Series 2013-10, SPRU - Science Policy Research Unit, University of Sussex Business School.
    2. Alex Coad & Werner Hölzl, 2012. "Firm Growth: Empirical Analysis," Chapters, in: Michael Dietrich & Jackie Krafft (ed.), Handbook on the Economics and Theory of the Firm, chapter 24, Edward Elgar Publishing.
    3. Alex Coad & Christina Guenther, 2013. "Diversification patterns and survival as firms mature," Small Business Economics, Springer, vol. 41(3), pages 633-649, October.
    4. 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.
    5. 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.
    6. Cuntz, A.N. & Blind, K., 2010. "Global Diffusion of the Non-Traditional Banking Model and Alliance Networks: Social Exposure, Learning and Moderating Regulatory Effort," ERIM Report Series Research in Management ERS-2010-044-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    7. Marco Capasso & Elena Cefis & Alessandro Sapio, 2013. "Reconciling quantile autoregressions of firm size and variance–size scaling," Small Business Economics, Springer, vol. 41(3), pages 609-632, October.

    More about this item

    Keywords

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    JEL classification:

    • 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

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