What Makes a High-Growth Firm? A Probit Analysis Using Spanish Firm-Level Data

38 Pages Posted: 13 Sep 2009

Date Written: September 11, 2009


Many studies have established that a small number of firms, known as fast-growth firms or Gazelles, create most of the new jobs. In spite of the importance of this topic from a policy-point of view, most of those studies are descriptive and limited to a comparison of the characteristics of the high-growth group with respect to a control group of firms. This paper, on the other hand, performs a multivariate analysis of the determinants of the fast growth of Spanish firms controlling for the possible endogeneity of some variables. We use for that purpose a firm-level database with information for about 200,000 Spanish firms per year between 1996 and 2003. We find that being a start-up increases the probability of fast growth by more than 30 percentage points, conditioned on having survived over the period. Firms with initial higher relative wages and debt ratio, up to a certain point, also experience higher chances of fast growth. Hence, as it was established elsewhere, better access to finance and to human capital are key to increase the number and growth of Gazelles. We also find that high-growth firm sustain their expansion with relatively more debt and fixed-term contracts than the rest of the firms in the sample.

Keywords: Gazelles, Job creation, Firm-level data

JEL Classification: J23, L11, L25

Suggested Citation

Lopez-Garcia, Paloma and Puente, Sergio, What Makes a High-Growth Firm? A Probit Analysis Using Spanish Firm-Level Data (September 11, 2009). Banco de Espana Working Paper No. 0920, Available at SSRN: https://ssrn.com/abstract=1471893 or http://dx.doi.org/10.2139/ssrn.1471893

Paloma Lopez-Garcia (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314

Sergio Puente

Banco de España ( email )

Alcala 50
Madrid 28014

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