Bursting into Life: Firm Growth and Growth Persistence by Age

30 Pages Posted: 12 Jun 2015

Date Written: June 10, 2015


Is firm growth more persistent for young or old firms? Theory gives us no clear answer, and previous empirical investigations have been hampered by a lack of detailed data on firm age, as well as a non-representative coverage of young firms. We overcome these shortcomings using a rich dataset on all limited liability firms in Sweden during 1997-2010, covering firms of all ages and information on registered start year. We find that sales growth for new ventures is characterized by positive persistence, whereas it quickly turns negative and remains negative as firms get older. It thus seems that the growth paths of older firms are buffeted around by environmental turbulence, and that older firms may have challenges in adapting their strategies to changing market conditions, whereas new firms experience an early burst of sustained growth.

Keywords: Firm age; growth rate autocorrelation; sales growth; learning-by-doing; minimum efficient scale

JEL Classification: D22; L25; L26

Suggested Citation

Coad, Alex and Daunfeldt, Sven-Olov and Halvarsson, Daniel, Bursting into Life: Firm Growth and Growth Persistence by Age (June 10, 2015). Available at SSRN: https://ssrn.com/abstract=2616759 or http://dx.doi.org/10.2139/ssrn.2616759

Alex Coad (Contact Author)

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050

Sven-Olov Daunfeldt

HUI Research ( email )

Regerinsgatan 60
Stockholm, SE-10329

Daniel Halvarsson

Ratio Institute ( email )

P.O. Box 3203
SE-103 64 Stockholm

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