Bursting into life: firm growth and growth persistence by age

Abstract

Is firm growth more persistent for young or old firms? Theory gives us no clear guidance, and previous empirical investigations have been hampered by a lack of detailed data on firm age, as well as a non-representative coverage of young firms. We overcome these shortcomings using a rich dataset on all limited liability firms in Sweden during 1998–2008, covering firms of all ages and information on registered start year. Sales growth for new ventures is characterized by positive persistence, which quickly turns negative as firms get older. Young firms are more likely to have two consecutive periods of positive growth. While new firms experience an early burst of sustained growth, older firms have more erratic growth paths.
Related content: Working Paper No. 264

Amundsen versus Scott: are growth paths related to firm performance?

Article (with peer review)Publication

Coad, A., Daunfeldt, SO. & Halvarsson, D.

Publication year

2022

Published in

Small Business Economics 59, 593–610 (2022).

Abstract

In the race to the South Pole, Roald Amundsen’s expedition covered an equal distance each day, irrespective of weather conditions, while Scott’s pace was erratic. Amundsen won the race and returned without loss of life, while Scott and his men died. In the context of firm growth, the Amundsen hypothesis suggests that smoother growth paths are associated with better performance in subsequent periods. We develop a new method to investigate how firms’ sales growth deviates from their long-run average growth path. Our baseline results suggest that growth path volatility is associated with higher growth of sales and profits, but also with higher exit rates. However, this result is driven by firms with negative growth rates. For positive-growth firms, volatility is negatively associated with both sales growth and survival, providing nuanced support for the Amundsen hypothesis.

The article can be accessed here.

Ratio Working Paper No. 358: Native Population Turnover & Emerging Segregation: The Role of Amenities, Crime and Housing

Working paperPublication

Korpi, M., Halvarsson, D., Öner, Ö., A.V. Clark, W., Mihaescu, O., Östh, J. & Bäckman, O.

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Publication year

2022

Published in

Ratio Working Paper.

Abstract

Using geo-coded full-population grid-level data for the three largest metropolitan areas in Sweden, 1993-2016, this paper i) estimates the level and pace of ethnic segregation, ii) examines possible tipping points in this development, and iii) gauges the importance of several mitigating or exacerbating factors (such as the mix of housing area tenure type, different types of amenities, and crime). We use OLS and 2SLS to estimate outcomes at two different geographic levels; 250 x 250 square meter grids and SAMS areas (roughly equivalent to US census tracts), respectively. On average, we find that for every 1 percentage point increase in immigration, native growth is reduced by around -0.3 percentage points. Crime levels exacerbate developments and factors such as housing area tenure-type mix and access to various amenities slows it down, but only marginally so. Using repeated and single random sampling for cross-validation, and the twin common methodological approaches as suggested in the literature, we estimate possible tipping points in these segregation developments. In contrast to most other studies in the literature, none of our potential tipping points are however statistically significant when probing their relevance in explaining factual population developments, suggesting a rather more continuous – albeit steeply so – segregation process rather than a structural brake. In terms of tipping point methodology, our main findings are that fixed-point estimation is less robust than R-square maximization for small geographical units, and that the former consistently selects for lower tipping-point candidates than the latter.

Ratio Working Paper No. 360: Do gender norms travel within corporations? The impact of foreign subsidiaries on the home country gender wage gap

Working paperPublication

Halvarsson, D., Lark, O., Tingvall, P., Vatherd, P. & Videnord, J.

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Publication year

2022

Published in

Ratio Working Paper series.

Abstract

In this note, we provide evidence that gender norms can be transferred within firms and across borders by means of foreign direct investment. Using microdata from both Sweden and Estonia, two countries with vastly different levels of gender inequality, we find that firms in Sweden with strong intra-firm linkages to Estonia display a relatively large gender wage gap at home.

Abstract

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