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What makes a high-growth firm? A probit analysis using Spanish firm-level data

Author

Listed:
  • Paloma López-García

    (Banco de España)

  • Sergio Puente

    (Banco de España)

Abstract
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.

Suggested Citation

  • Paloma López-García & Sergio Puente, 2009. "What makes a high-growth firm? A probit analysis using Spanish firm-level data," Working Papers 0920, Banco de España.
    • Handle: RePEc:bde:wpaper:0920
    as

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/09/Fic/dt0920e.pdf
    File Function: First version, September 2009
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    Citations

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    Cited by:

    1. Agustí Segarra & Mercedes Teruel, 2014. "High-growth firms and innovation: an empirical analysis for Spanish firms," Small Business Economics, Springer, vol. 43(4), pages 805-821, December.
    2. Paloma Lopez-Garcia & Sergio Puente, 2012. "What makes a high-growth firm? A dynamic probit analysis using Spanish firm-level data," Small Business Economics, Springer, vol. 39(4), pages 1029-1041, November.
    3. Daunfeldt, Sven-Olov & Elert, Niklas & Johansson, Dan, 2010. "The Economic Contribution of High-Growth Firms: Do Definitions Matter?," Ratio Working Papers 151, The Ratio Institute.
    4. Békés, Gábor & Muraközy, Balázs, 2012. "Magyar gazellák. A gyors növekedésű vállalatok jellemzői és kialakulásuk elemzése [Hungarian gazelles: what makes a high-growth firm in Hungary?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 233-262.

    More about this item

    Keywords

    Gazelles; Job creation; Firm-level data;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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