High-growth firms and productivity: evidence from the United Kingdom

Jun Du; Yama Temouri

doi:10.1007/s11187-014-9584-2

High-growth firms and productivity: evidence from the United Kingdom

Jun Du
, Yama Temouri

Research output: Contribution to journal › Article › peer-review

97 Scopus citations

Abstract

There is considerable evidence that high-growth firms (HGFs) contribute significantly to employment and economic growth. However, the literature so far does not adequately explore the link between HGFs and productivity. This paper investigates the empirical link between total factor productivity (TFP) growth and HGFs, defined in terms of sales growth, in the United Kingdom over the period 2001–2010, by examining two related research questions. Firstly, does higher TFP growth lead to HGF status and secondly, does HGF experience help firms achieve faster TFP growth? Our findings reveal that firms in both the manufacturing and services sectors are more likely to become HGFs when they exhibit higher TFP growth. In addition, firms that have had HGF experience tend to enjoy faster TFP growth following the high-growth episodes. Policy implications are drawn based on the self-reinforcing process of the high-growth phenomenon that is revealed by our results.

Original language	British English
Pages (from-to)	123-143
Number of pages	21
Journal	Small Business Economics
Volume	44
Issue number	1
DOIs	https://doi.org/10.1007/s11187-014-9584-2
State	Published - 1 Jan 2015

Keywords

Firm growth
High-growth firms
Productivity

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1007/s11187-014-9584-2

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title = "High-growth firms and productivity: evidence from the United Kingdom",

abstract = "There is considerable evidence that high-growth firms (HGFs) contribute significantly to employment and economic growth. However, the literature so far does not adequately explore the link between HGFs and productivity. This paper investigates the empirical link between total factor productivity (TFP) growth and HGFs, defined in terms of sales growth, in the United Kingdom over the period 2001–2010, by examining two related research questions. Firstly, does higher TFP growth lead to HGF status and secondly, does HGF experience help firms achieve faster TFP growth? Our findings reveal that firms in both the manufacturing and services sectors are more likely to become HGFs when they exhibit higher TFP growth. In addition, firms that have had HGF experience tend to enjoy faster TFP growth following the high-growth episodes. Policy implications are drawn based on the self-reinforcing process of the high-growth phenomenon that is revealed by our results.",

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note = "Funding Information: We are grateful for helpful comments and suggestions by two anonymous referees who have helped to improve the paper considerably. This paper was written as part of a NESTA funded project on {\textquoteleft}High Growth Firms and Impacts{\textquoteright}. The authors acknowledge the financial support from NESTA and thank workshop participants at NESTA, particularly Albert Bravo-Biosca, Catherine Robinson, Mark Hart, Michael Anyadike-Danes and Sumon Bhaumik for their constructive comments and suggestions on an earlier version of the paper. We also thank Yundan Gong for the input in the project and Chris Jones for the support for revising the final version of the paper. Publisher Copyright: {\textcopyright} 2014, The Author(s).",

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N1 - Funding Information: We are grateful for helpful comments and suggestions by two anonymous referees who have helped to improve the paper considerably. This paper was written as part of a NESTA funded project on ‘High Growth Firms and Impacts’. The authors acknowledge the financial support from NESTA and thank workshop participants at NESTA, particularly Albert Bravo-Biosca, Catherine Robinson, Mark Hart, Michael Anyadike-Danes and Sumon Bhaumik for their constructive comments and suggestions on an earlier version of the paper. We also thank Yundan Gong for the input in the project and Chris Jones for the support for revising the final version of the paper. Publisher Copyright: © 2014, The Author(s).

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N2 - There is considerable evidence that high-growth firms (HGFs) contribute significantly to employment and economic growth. However, the literature so far does not adequately explore the link between HGFs and productivity. This paper investigates the empirical link between total factor productivity (TFP) growth and HGFs, defined in terms of sales growth, in the United Kingdom over the period 2001–2010, by examining two related research questions. Firstly, does higher TFP growth lead to HGF status and secondly, does HGF experience help firms achieve faster TFP growth? Our findings reveal that firms in both the manufacturing and services sectors are more likely to become HGFs when they exhibit higher TFP growth. In addition, firms that have had HGF experience tend to enjoy faster TFP growth following the high-growth episodes. Policy implications are drawn based on the self-reinforcing process of the high-growth phenomenon that is revealed by our results.

AB - There is considerable evidence that high-growth firms (HGFs) contribute significantly to employment and economic growth. However, the literature so far does not adequately explore the link between HGFs and productivity. This paper investigates the empirical link between total factor productivity (TFP) growth and HGFs, defined in terms of sales growth, in the United Kingdom over the period 2001–2010, by examining two related research questions. Firstly, does higher TFP growth lead to HGF status and secondly, does HGF experience help firms achieve faster TFP growth? Our findings reveal that firms in both the manufacturing and services sectors are more likely to become HGFs when they exhibit higher TFP growth. In addition, firms that have had HGF experience tend to enjoy faster TFP growth following the high-growth episodes. Policy implications are drawn based on the self-reinforcing process of the high-growth phenomenon that is revealed by our results.

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High-growth firms and productivity: evidence from the United Kingdom

Abstract

Keywords

UN SDGs

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