Sleeping Gazelles: High Profits But No Growth

34 Pages Posted: 24 Feb 2016

Date Written: October 1, 2013

Abstract

Among 205,322 limited liability firms in Sweden during 1997-2010, more than 10% did not hire new employees in any given 3-year period despite having high profits. Nearly one-third continued to have high profits in the next three-year period, but still no growth. Regression analysis indicates that these firms were not randomly distributed; rather they were small and young, did not belong to an enterprise group, had low own-capital as a share of total liabilities, and operated in local markets with high profit opportunities and low competition. We conclude that it might be more beneficial to focus policy towards these firms instead of towards a few high-growth firms that, having just grown exponentially, may not be best positioned to grow further.

Suggested Citation

Bornhall, Anders and Daunfeldt, Sven-Olov and Rudholm, Niklas, Sleeping Gazelles: High Profits But No Growth (October 1, 2013). SWPS 2013-10, Available at SSRN: https://ssrn.com/abstract=2736836 or http://dx.doi.org/10.2139/ssrn.2736836

Anders Bornhall (Contact Author)

HUI Research ( email )

Regerinsgatan 60
Stockholm, SE-10329
Sweden

Sven-Olov Daunfeldt

HUI Research ( email )

Regerinsgatan 60
Stockholm, SE-10329
Sweden

Niklas Rudholm

HUI Research

Regerinsgatan 60
Stockholm, SE-10329
Sweden

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