Sleeping Gazelles: High profits but no growth

Anders Bornhäll (), Sven-Olov Daunfeldt and Niklas Rudholm ()
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Niklas Rudholm: Research, HUI, Sweden

No 2013-10, SPRU Working Paper Series from SPRU - Science Policy Research Unit, University of Sussex Business School

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.

Date: 2013-10
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Working Paper: Sleeping Gazelles: High Profits but No Growth (2013)
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