Achieving High Growth in Policy-Dependent Industries: Differences between Startups and Corporate-Backed Ventures

Abstract

This research examines which firms achieve high growth in policy-dependent industries. Using the European solar photovoltaic industry as our empirical setting, we investigate the impact of policy support on the growth of independent startups and corporate-backed ventures operating across countries with diverse policy conditions. We find that producers' growth is positively linked to policy generosity, and negatively linked to policy discontinuity. Moreover, corporate-backed ventures are less affected by policy generosity compared to entrepreneurial startups, and less impacted by policy discontinuity as well. Our results underline the importance of country- and firm-level differences in analyzing firms' response to regulatory policies, and point to the need for a better understanding of the unintended consequences of policies designed to support new industries.

Keywords: firm growth; high growth; public policy; policy uncertainty; policy generosity; policy discontinuity; solar photovoltaic; renewable energy; organizational prehistory

JEL Classification: L23; L1; L21; L5; L63; L98; M11; M13; N6; O38; Q42; Q5