Swimming Upstream Throughout the Turmoil: Evidence on Firm Growth During the Great Recession

In contrast to the so-called cleansing effect, during the Great Recession we observe highly heterogeneous firm performances. In particular, a not negligible subset of firms grew considerably despite of the general tendency towards downsizing. In this paper, we explain the behaviour of these swimming upstream firms (SUFs). We obtain three main results. First, SUFs exhibit certain firm-specific characteristics: they are younger and relatively more productive than non-SUFs. Second, SUFs adopt highly proactive strategic profiles, which assign significant importance to activities related to innovation, intangibles, and internationalization. Third, SUFs tend to react to changes in market opportunities, although they suffer from sticky processes of resource reallocation between exiting and surviving firms. Moreover, their growth seems to take place primarily within a regime of cumulative destruction rather than creative destruction. Some of the implications of these results for managers and policy makers are discussed.