Growth Processes of High-Growth Firms in the UK

Alex Coad, Marc Cowling, Joshua Siepel

Nesta Working Paper 12/10
Issued: October 2012
JEL Classification: L125
Keywords: High growth firms, growth process, SVAR, rivalry, firm growth

Abstract

We seek to complement existing research on High-Growth Firms (HGFs) by applying relatively advanced econometric techniques to the analysis of HGF growth processes. Structural Vector Autoregressions (SVARs) show that the growth processes of firms start with employment growth, then sales growth, then assets growth, then profits growth, while the growth processes of HGFs put more emphasis on sales growth driving the other dimensions. We then investigate the possibility of interdependence or 'spillovers' between the growth of HGFs and non-HGFs. Peer-effects econometrics dispel concerns that HGFs should be seen as 'cannibals' that exploit growth opportunities that would otherwise be exploited by other firms.

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