A report suggests that one of the best way to predict a company’s future high-growth behavior is to look at its past high-growth behavior.
Studies across many different countries have shown that the greatest share of new jobs are created by high-growth firms (HGFs), which are typically defined as companies that grow by an average of 20% per year during a three-year period, or the top 1% of the fastest-growing companies in a country. An article published in the journal Small Business Economics examined Spanish companies in order to identify the traits that make companies more or less likely to experience high growth. Here is what the authors learned:
“We find that past extreme growth episodes increase the probability of current fast growth, which is in contrast to previous findings on the topic. We also find that human resource practices, such as employing qualified personnel or the mix of contracts offered, are important determinants of fast growth.”
The full study is only accessible behind a paywall. It can be found here.