Most firms do not grow, and a small number of high-growth firms seem to create most new jobs. These firms have therefore received increasing attention among policymakers. The question is whether high-growth tends to persist? We investigate this question using data on 432,689 observations in Sweden during 1998-2008. We find that high-growth firms had declining growth rates in the previous 3-year period, and their probability of repeating high growth rates was very low. HGFs are essentially one-hit wonders, and it is thus doubtful whether policymakers can improve economic outcomes by targeting them.
Related content: Working Paper No. 197
Daunfeldt, S-O. & Halvarsson, D. (2015). Are high-growth firms one-hit wonders? Evidence from Sweden. Small Business Economics, 44(2), 361-383. DOI: 10.1007/s11187-014-9599-8