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Ratio Working Paper No. 204: Growth Paths and Survival Chances

PublicationWorking paper
Alex Coad, David J. Storey, Företagandets villkor, Företagstillväxt, Gambler's ruin theory, Julian Frankish, Richard G. Roberts, Start-ups, Tillväxt
Ratio Working Paper No. 204
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Abstract

This paper links new firm survival with growth, with a focus on the patterns in firms’ growth paths. We theorise a Gambler’s Ruin framework by arguing that new rm performance is best modelled as a random walk process, but that survival is nonrandom and depends primarily on the stock of accumulated resources. A firm’s resources are either there when the business begins or are generated by successful periods `wins’. The empirical section tracks, over six years, the sales and survival/non-survival of 6,247 UK start-ups which all began trading in the same quarter of 2004. We do not find strong evidence in favour of a taxonomy of growth paths, because we observe that every possible growth path seems to occur with roughly equal probability. However, we observe that growth paths influence subsequent survival. Controlling for lagged size, we observe that longer lags of growth, and even start-up size, have signicant eects on survival.

Related content: Growth paths and survival chances

Coad, A., Frankish, J., Roberts, R.G. & Storey, D.J. (2012). Growth Paths and Survival Chances: An Application of Gambler’s Ruin Theory. Ratio Working Paper No. 204.

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Ratio Working Paper No. 204: Growth Paths and Survival Chances
Working paperPublication
Coad, A., Frankish, J., Roberts, R.G. & Storey, D.J.
Publication year

2012

Abstract

This paper links new firm survival with growth, with a focus on the patterns in firms’ growth paths. We theorise a Gambler’s Ruin framework by arguing that new rm performance is best modelled as a random walk process, but that survival is nonrandom and depends primarily on the stock of accumulated resources. A firm’s resources are either there when the business begins or are generated by successful periods `wins’. The empirical section tracks, over six years, the sales and survival/non-survival of 6,247 UK start-ups which all began trading in the same quarter of 2004. We do not find strong evidence in favour of a taxonomy of growth paths, because we observe that every possible growth path seems to occur with roughly equal probability. However, we observe that growth paths influence subsequent survival. Controlling for lagged size, we observe that longer lags of growth, and even start-up size, have signicant eects on survival.

Related content: Growth paths and survival chances

Ratio Working Paper No. 204: Growth Paths and Survival Chances
Working paperPublication
Coad, A., Frankish, J., Roberts, R.G. & Storey, D.J.
Publication year

2012

Abstract

This paper links new firm survival with growth, with a focus on the patterns in firms’ growth paths. We theorise a Gambler’s Ruin framework by arguing that new rm performance is best modelled as a random walk process, but that survival is nonrandom and depends primarily on the stock of accumulated resources. A firm’s resources are either there when the business begins or are generated by successful periods `wins’. The empirical section tracks, over six years, the sales and survival/non-survival of 6,247 UK start-ups which all began trading in the same quarter of 2004. We do not find strong evidence in favour of a taxonomy of growth paths, because we observe that every possible growth path seems to occur with roughly equal probability. However, we observe that growth paths influence subsequent survival. Controlling for lagged size, we observe that longer lags of growth, and even start-up size, have signicant eects on survival.

Related content: Growth paths and survival chances

Ratio Working Paper No. 349: Industrial conflict in essential services in a new era – Swedish rules in a comparative perspective
Working paperPublication
Karlson, N.
Publication year

2021

Published in

Ratio Working Paper

Abstract

This paper examines whether the Swedish regulatory system of dealing with industrial conflicts that affect essential services need an update or reform. Are the existing rules effective in a world where many essential services are upheld by many interdependent agents in complex systems where every single node becomes critical for the functioning of the system, and where the essential service activities could be either private or public? A comparative study is conducted with the corresponding regulatory systems of the United Kingdom, Germany, and Denmark.
The conclusion is that Sweden is a special case. The Swedish protection against and readiness in dealing with societally harmful industrial conflicts in essential services is weaker than in the countries of comparison. Just as in relation to other threats to essential services, it is not sustainable to claim that just because such a threat is not currently present, there would be no need for preparedness.
There are many alternative ways to handle this. Desirable methods should both prevent harmful conflicts from erupting and end conflicts that have grown harmful to society at a later stage. The labour market organisations should have a mutual interest in reforming the rules.

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