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Measuring the persistence of high firm growth: choices and consequences

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  • Eva Christine Erhardt

    (University of Mainz)

Abstract

Does high growth persist? This study shows how the answer to this question depends on the measurement of growth. It systematically compares the consequences of different choices (absolute, relative, and composite growth formulas) on three notions of persistence: repetition of high growth, future growth of surviving high-growth firms, and overall future growth of both survivors and exits. The empirical analysis is based on administrative data from Amadeus on Bulgarian firms for 3-year periods of growth between 2001 and 2010. The focus is on total growth in employees. Our findings demonstrate how results largely vary between growth measures. Moreover, we detect empirical regularity related to growth measures in previous evidence. Most importantly, if persistence is understood as overall future growth including both the contributions by surviving and exiting firms, then high growth does not persist.

Suggested Citation

  • Eva Christine Erhardt, 2021. "Measuring the persistence of high firm growth: choices and consequences," Small Business Economics, Springer, vol. 56(1), pages 451-478, January.
    • Handle: RePEc:kap:sbusec:v:56:y:2021:i:1:d:10.1007_s11187-019-00229-7
    DOI: 10.1007/s11187-019-00229-7
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    3. Guilherme Fowler A. Monteiro & Adriana Bruscato Bortoluzzo & Pedro Lipkin P. Rosa, 2021. "Is there heterogeneity among persistent high‐growth firms?," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2272-2292, December.
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    8. Cyrine Ben-Hafaïedh & Anaïs Hamelin, 2023. "Questioning the Growth Dogma: A Replication Study," Entrepreneurship Theory and Practice, , vol. 47(2), pages 628-647, March.
    9. Eva Christine Erhardt, 2022. "Prevalence and Persistence of High-Growth Entrepreneurship: Which Institutions Matter Most?," Journal of Industry, Competition and Trade, Springer, vol. 22(2), pages 297-332, June.
    10. Ren Lu & Qing Song & Ting Xia & Daguo Lv & Torger Reve & Ze Jian, 2021. "Unpacking the U‐shaped relationship between related variety and firm sales: Evidence from Japan," Papers in Regional Science, Wiley Blackwell, vol. 100(5), pages 1136-1157, October.
    11. Alex Coad, 2022. "Lumps, Bumps and Jumps in the Firm Growth Process," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 18(4), pages 212-267, April.
    12. Justin J. P. Jansen & Ciaran Heavey & Tom J. M. Mom & Zeki Simsek & Shaker A. Zahra, 2023. "Scaling‐up: Building, Leading and Sustaining Rapid Growth Over Time," Journal of Management Studies, Wiley Blackwell, vol. 60(3), pages 581-604, May.

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