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One swallow does not make a summer: episodes and persistence in high growth

Silviano Esteve-Pérez, Fabio Pieri and Diego Rodriguez ()
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Diego Rodriguez: Universidad Complutense de Madrid

Small Business Economics, 2022, vol. 58, issue 3, No 15, 1517-1544

Abstract: Abstract This paper analyzes firms’ episodes (spells) of high growth (HG) using a sample of Spanish manufacturing firms observed over two decades. The use of duration models allows us to investigate the following: (i) the probability of experiencing HG episodes, (ii) persistence in HG, and (iii) the determinants of the transitions in and out of the HG state and whether their impact varies over the business cycle. We find that about half of the firms experience at least one HG episode, but they seldom experience more than one. Moreover, high-growth status is rarely repeated due to high first-year selection. Yet, in subsequent years beyond the first one, the hazard rate from HG status falls substantially. These results suggest an “episodic” nature of HG and further allow us to identify two groups of firms characterized by the following: (i) (relatively) long HG spells and short no high-growth (NHG) spells and (ii) short HG spells and long NHG spells. In addition, some firm and market (demand) characteristics increase the probability of becoming an HG firm and enhancing HG persistence. Finally, during the downturn, the role of younger age and smaller size in explaining HG decreases.

Keywords: Duration analysis; High-growth firms; Persistence in high growth; Manufacturing firms; Business cycle (search for similar items in EconPapers)
JEL-codes: C41 D22 L25 L26 L60 M13 (search for similar items in EconPapers)
Date: 2022
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Working Paper: One swallow does not make a summer:Episodes and persistence in high-growth (2020) Downloads
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DOI: 10.1007/s11187-020-00443-8

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