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Sleeping Gazelles: High Profits but No Growth

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  • Bornhäll, Anders

    (HUI Research)

  • Daunfeldt, Sven-Olov

    (HUI Research)

  • Rudholm, Niklas

    (HUI Research)

Abstract

Among 205,322 limited liability firms in Sweden during 1997-2010, more than 10% did not hire new employees in any given 3-year period despite having high profits. Nearly one-third continued to have high profits in the next three-year period, but still no growth. Regression analysis indicates that these firms were not randomly distributed; rather they were small and young, did not belong to an enterprise group, had low own-capital as a share of total liabilities, and operated in local markets with high profit- opportunities and low competition. We conclude that it might be more beneficial to focus policy towards these firms instead of towards a few high-growth firms that, having just grown exponentially, may not be best positioned to grow further.

Suggested Citation

  • Bornhäll, Anders & Daunfeldt, Sven-Olov & Rudholm, Niklas, 2013. "Sleeping Gazelles: High Profits but No Growth," HUI Working Papers 91, HUI Research.
    • Handle: RePEc:hhs:huiwps:0091
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. In Search of the Celtic Gazelle.
      by brianmlucey in Brian M. Lucey on 2013-11-09 14:20:29

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    Cited by:

    1. Anders Bornhäll & Sven-Olov Daunfeldt & Niklas Rudholm, 2017. "Employment protection legislation and firm growth: evidence from a natural experiment," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(1), pages 169-185.
    2. Sorin-Romulus Berinde & Adrian-Gabriel Corpădean, 2019. "Assessing the Sustainable Room for Growth for a Particular Romanian Tourism Area of Business: The Case of Accommodation Businesses," Sustainability, MDPI, vol. 11(1), pages 1-16, January.
    3. Sven-Olov Daunfeldt & Niklas Elert & Dan Johansson, 2014. "The Economic Contribution of High-Growth Firms: Do Policy Implications Depend on the Choice of Growth Indicator?," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 337-365, September.

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    More about this item

    Keywords

    Gazelles; high-growth firms; firm growth; growth barriers; job creation;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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