High-growth firms’ contribution to aggregate productivity growth

Marta Bisztray, Francesca de Nicola and Balazs Murakozy

Small Business Economics, 2023, vol. 60, issue 2, No 17, 811 pages

Abstract: Abstract This paper investigates the contribution of high-growth firms (HGFs) to aggregate productivity growth, using Hungarian firm-level data. Three stylized facts emerge. First, output-based HGFs substantially outperform employment-based ones in terms of their productivity contribution: on average, sales-based HGFs contribute 5 times as much as employment-based ones. Further, the contribution of employment-based HGFs is negative in 48-50% of industry-years, compared to 25-31% for sales-based HGFs. Second, HGFs tend to contribute to productivity growth only during their high-growth phase but not afterwards. Third, HGFs’ contribution to productivity growth is higher in industries with more effective reallocation and with more young firms, but none of these are strong predictors of the HGFs’ contribution. Finally, we present a simple benchmark model to show that these patterns arise naturally under realistic correlation structures.

Keywords: High-growth firms; Productivity growth; Reallocation; Industry dynamic; Productivity decomposition; L25; O40 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11187-022-00614-9

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