High-growth firms in New Zealand: superstars or shooting stars?

Abstract

There is intense policy interest in high-growth firms but the evidence base is weak. This is an empirical study of the origin, demographics, and fate of two cohorts of high-growth firms in New Zealand. Customised data on high-growth firms, covering 1125 and 1067 firms in the 2005 and 2008 cohorts respectively, came from government sources. High-growth firms are smaller; more likely to emerge in service industries; and grow through the creation of multiple separate establishments. The ability to sustain high-growth is independent of firms’ pre-growth age and employment size. High-growth firms have death rates up to four times higher than other contemporary firms, but the survivors do retain their employment size, continuing to contribute disproportionately to employment for some years beyond their initial high-growth phase. The demonstrated inability of high-growth firms to sustain high growth suggests a rethink on how ‘high growth’ is defined, with future research focusing on sustained growth firms.