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In search of gazelles: machine learning prediction for Korean high-growth firms

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  • Ho-Chang Chae

    (University of Central Oklahoma)

Abstract

High-growth firms (HGFs), also known as gazelle firms, have attracted considerable attention due to their outstanding contributions to job creation and additional spillover benefits. Despite years of work, it is still challenging to predict high-growth firms, and many essential HGF characteristics are yet unknown. This study analyzes high-quality Korean firm data and predicts high-growth firms using big data and machine learning methods, such as LASSO, adaptive LASSO, and random forest analysis. Besides, we include variables related to business strategies and activities such as innovation, information systems like ERP, outsourcing, strategic alliances, and expansion to international markets to determine whether the addition of this information enhances HGF prediction. We discovered the significance of revenue growth, efficiency management, asset investment, and human resource management skills in increasing one’s chances of becoming an HGF. The findings suggest that rather than being an erratic process or being purely driven by structural characteristics, firm growth is determined by the firm's endogenous strategic characteristics. Plain English Summary With cutting-edge machine learning techniques including LASSO, adaptive LASSO, and random forest, we discovered the significance of revenue growth, efficiency management, asset investment, and human resource management skills in increasing one’s chances of becoming an HGF.

Suggested Citation

  • Ho-Chang Chae, 2024. "In search of gazelles: machine learning prediction for Korean high-growth firms," Small Business Economics, Springer, vol. 62(1), pages 243-284, January.
    • Handle: RePEc:kap:sbusec:v:62:y:2024:i:1:d:10.1007_s11187-023-00760-8
    DOI: 10.1007/s11187-023-00760-8
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    More about this item

    Keywords

    High-growth firms; Gazelle; LASSO; Adaptive LASSO; Machine learning; Big data; Random forest; Innovation; South Korea; Strategic alliance; Information systems;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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