High-Growth Entrepreneurship

High-Growth Entrepreneurship

Brown, Earle, Kim, Lee

Motivation:

Nearly all net job creation from startups HJM 2913

most startups fail

most survivors don't grow

some grow and few grow a lot.

employment growth highly skewed.

Questions about high growth

- distribution of size at entry

- persistence of size as firms age

- founding characteristics

- persistence of characteristics

Related research: firm size, age, and growth

- small firms are job creators (Birch 1978)

- Newmark e al (2011) confirms negative size growth relation

HJM (2013) age much more important than size

Hurst and Pugsley (2011): typical small firms dont' grow. Non-pecuniary motives for SBOs.

High-growth firms

- Gazelles: high-growth firms

absolute change vs gorwth rate.

OECD (2007) among firms less than 10 employees with annual growth of more than 20 percent

Acs et al (2008 dE * dE / E > 2. Over 4 years.

Caveats

- age often not measured or controlled for

- entry job creation excluded

- low persistence of growth over time

Firm Cohort studies

- Kauffman Firm Survey

- Cabral and Mata (2003)

Entry Age 0 from Business Register

Age 7 employment in same quarter.

Weight founders by industry

HG is y; top 5% of the employment for found i, firm j and year t.