What is it about?
High-growth firms attract considerable attention from academics and policy-makers. This is inevitable given the rapid rate at which these exceptional firms create employment. But the high-growth phase of these firms is typically very short-lived and seldom repeated. The main purpose of this paper is to track two cohorts of high-growth firms (in New Zealand) for several years beyond their initial high-growth phase, to find out what happens to these firms once they are out of the high-growth ('shooting star') limelight. While we find their death rates are up to four times higher than for other contemporary firms, the survivors retain their employment size and contribute disproportionately to employment well beyond the high-growth episode.
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Why is it important?
The paper is important because it tells us so much more about high-growth firms out well beyond their short high-growth phase. It would be tempting but foolhardy for policy-makers to devote public funds to high-growth firms just as these appear on their radars. It is critical to understand what becomes of such firms - and any public funding they attract - when they no longer meet the high-growth criterion and have move off the radar screen. In the longer term, are high-growth firms a better policy target than other contemporary but slower growing firms?
Perspectives
We had to wait quite a few years before we could start working on this paper because of the need to track our cohorts of high-growth firms over time, e.g., from their emergence in 2005 through to 2014. Throughout we used the well-known OECD (2007) definition of 'high growth', one also used by the Statistics New Zealand (who supplied all the basic data). Reflecting back on the work, we came to question this definition because so few firms will ever meet it and, of those that do, only a tiny fraction are able to maintain such high rates of growth beyond the initial three or four years. A useful perspective for future research would be to focus on cohorts of sustained growth firms, their death rates, and longer term contribution to employment.
Professor Bob Hamilton
University of Canterbury
Read the Original
This page is a summary of: High-growth firms in New Zealand: Superstars or shooting stars?, International Small Business Journal Researching Entrepreneurship, July 2016, SAGE Publications,
DOI: 10.1177/0266242616659913.
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