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Showing papers by "Alex Coad published in 2012"


Journal ArticleDOI
TL;DR: In this article, the authors find that the size and age of small firms have a negative impact on firm growth in the majority of specifications and that firms managed by women have lower expected growth rates.
Abstract: Empirical work on micro and small firms focuses on developed countries, while existing work on developing countries is all too often based on small samples taken from ad hoc questionnaires. The census data we analyze here are fairly representative of small business structure in India. Consistent with findings from prior research on developed countries, size and age have a negative impact on firm growth in the majority of specifications. Enterprises managed by women have lower expected growth rates. Proprietary firms face lower growth on the whole, especially if they are young firms. Exporting has a positive effect on firm growth, especially for young firms and for female-owned firms. Although some small firms are able to convert know-how into commercial success, we find that many others are unable to translate it into superior growth.

198 citations


OtherDOI
31 Aug 2012
TL;DR: This article showed that firm growth is well approximated by a random process and that the persistence of growth rates over time is associated with the heterogeneity at the firm level and with the low persistence over time.
Abstract: Recent research has led to the empirical regularity that firm growth rate distributions are heavy tailed. This finding implies that a few firms experience spectacular growth rates and decline, but that most firms have marginal growth rates. The literature on high-growth firms shows that high-growth firms are the central drivers of job creation in the economy but are neither clustered in high technology sectors nor are necessarily young and small. The evidence on the determinants of firm growth confirms that firm growth is difficult to predict. The finding that firm growth is well approximated by a random process does not only reflect the heterogeneity at the firm level but is also associated with the low persistence of growth rates over time.

115 citations


Journal ArticleDOI
Alex Coad1
TL;DR: In this paper, the authors suggest that business death is a suitable word for describing business closure and that even cases of voluntary "harvest liquidation" such as retirement can be described as business deaths.
Abstract: This paper is a critical evaluation of claims that business exits should not be seen as failures, on the grounds that sometimes they correspond to voluntary liquidations, or because they are learning opportunities. This can be seen as further evidence of bias affecting entrepreneurship research – where failures are repackaged as successes. We reiterate that the vast majority of business exits are unsuccessful. Drawing on ideas from the organizational life course, we suggest that business death is a suitable word for describing business closure. Even cases of voluntary ‘harvest liquidation’ such as retirement can meaningfully be described as business deaths.

96 citations


Journal ArticleDOI
TL;DR: Buerger et al. as discussed by the authors investigated the lead-lag relationship between the growth rates of patents, research and development (R&D), and employment for German regions over the period 1999-2005.
Abstract: Buerger M., Broekel T. and Coad A. Regional dynamics of innovation: investigating the co-evolution of patents, research and development (R&D), and employment, Regional Studies. This paper investigates the lead–lag relationships between the growth rates of patents, research and development (R&D), and employment for German regions over the period 1999–2005. The panel data set employed includes information on four two-digit industries. The results obtained from a vector autoregression model show that an increase in patents is associated with subsequent growth of employment in the medical and optical equipment industry as well as in the Electrics and electronics industry. With respect to the latter, the growth of patents is also associated with subsequent growth of R&D. Neither of these effects can be found for both the Chemicals and the Transport equipment industries. Buerger M., Broekel T. et Coad A. La dynamique regionale de l'innovation: examiner l'evolution simultanee des brevets, de la recherche et deve...

87 citations


Journal ArticleDOI
TL;DR: In this article, the authors sketch out a class of simple theoretical models capable of explaining the empirical regularity of the Laplace distribution of firm growth rates, which is a robust feature of the corporate growth process.
Abstract: A robust feature of the corporate growth process is the Laplace, or symmetric exponential, distribution of firm growth rates. In this paper, we sketch out a class of simple theoretical models capable of explaining this empirical regularity. We do not attempt to generalize on where growth opportunities come from, but rather we focus on how firms build upon growth opportunities. We base ourselves on Penrose's (1959) description of firm growth to explain how the interdependent nature of discrete resources may lead to the triggering off of a series of additions to a firm's resources. In a first formal model, we consider the case of employment growth in a hierarchy, and observe that growth rates follow an exponential distribution. In a second model, we include plant and capital as resources and we are able to reproduce a number of stylized facts about firm growth.

36 citations


Journal ArticleDOI
TL;DR: In this paper, a reduced form vector autoregression (VAR) model was applied to longitudinal panel data on French manufacturing firms (1996-2004) to observe the co-evolution of key variables such as growth of employment, sales, and gross operating surplus, as well as the growth of multifactor productivity.
Abstract: This paper offers new insights into the processes of firm growth by applying a reduced form vector autoregression (VAR) model to longitudinal panel data on French manufacturing firms (1996-2004). We observe the co-evolution of key variables such as growth of employment, sales, and gross operating surplus, as well as growth of multifactor productivity. It seems that employment growth is negatively associated with subsequent growth of productivity. This latter result, however, is sensitive to our choice of productivit indicator, i.e. multifactor productivity or labour productivity

31 citations


01 Jan 2012
TL;DR: In this paper, the authors apply relatively advanced econometric techniques to the analysis of high growth firms' growth processes and investigate the possibility of interdependence or "spillovers" between the growth of HGFs and non-HGFs.
Abstract: We seek to complement existing research on High-Growth Firms (HGFs) by applying relatively advanced econometric techniques to the analysis of HGF growth processes. Structural Vector Autoregressions (SVARs) show that the growth processes of firms start with employment growth, then sales growth, then assets growth, then profits growth, while the growth processes of HGFs put more emphasis on sales growth driving the other dimensions. We then investigate the possibility of interdependence or ‘spillovers’ between the growth of HGFs and non-HGFs. Peer-effects econometrics dispel concerns that HGFs should be seen as ‘cannibals’ that exploit growth opportunities that would otherwise be exploited by other firms.

7 citations


Journal ArticleDOI
TL;DR: In this article, the authors study the effects of diverse team composition on the survival and growth of new ventures using the Danish Linked Employer-Employee database and show that heterogeneity in team composition is a ected by the asymmetric hierarchical structure within the team, and that a unidimensional diversity indicator fails to capture the performance effects of heterogeneous team composition.
Abstract: We study the effects of diverse team composition on the survival and growth of new ventures using the Danish Linked Employer-Employee database. To get cleaner measures of diverse team composition, we focus on entrepreneurial dyads, and also investigate the asymmetric e ects of team composition by distinguishing between the 'primary' and the 'secondary' founder. We complement existing work by showing that heterogeneity in team composition is a ected by the asymmetric hierarchical structure within the team, and that a unidimensional diversity indicator (which is usually applied) fails to capture a number of performance effects of heterogeneous team composition. Ventures with a STEM-educated primary founder and a Business-educated secondary founder have high employment growth, while the opposite combination (Business first, STEM second) has low employment growth. Pairs of younger individuals have lower survival chances but higher employment growth. Family firms have lower employment growth, especially when formed with your mother.

6 citations


01 Jan 2012
TL;DR: In this paper, a series of OLS, logit and multinomial logit models were used to explore factors contributing to the performance and survival of high-technology firms.
Abstract: Despite the importance of high technology firms to the UK’s economy, relatively little is known about factors contributing to these firms’ long-run growth and survival. We examine these factors using a unique longitudinal dataset combining two waves of detailed surveys of 345 UK high tech firms and performance and survival data. We use a series of OLS, logit and multinomial logit models to explore factors contributing to the performance and survival of these firms. Our results show that long-term survival rates are near two thirds for the firms in our sample, and that performance within the sample is skewed by a limited number of high performing firms. We find that 40% of firms reported difficulty in finding skilled workers, and find that lack of access to skills results in lower long-run growth for these firms. We find that two-thirds of technology firms target overseas markets from birth, and the entry into overseas markets is important for survival and growth. Overall we conclude that the early strategic decisions made by firms have long-run impacts on their survival and growth, and we suggest that policy measures targeted at the shortfalls faced by these firms may have positive long-term consequences.

2 citations


Journal ArticleDOI
TL;DR: This article explored the determinants of start-up size by focusing on a cohort of 6247 businesses that started trading in 2004, using a unique dataset on customer records at Barclays Bank.
Abstract: This paper explores the determinants of start-up size by focusing on a cohort of 6247 businesses that started trading in 2004, using a unique dataset on customer records at Barclays Bank. In our theoretical model, post-entry growth is treated as a random walk, and start-up size is positively related to survival. In this view, business experience does not have any impact on post-entry growth (since growth is random), but is associated with higher survival if entrepreneurs with prior business experience have a larger start-up size. Quantile regressions show that prior business experience is significantly related with start-up size, as are a number of other variables such as age, education and bank account activity. Quantile treatment effects (QTE) estimates show that business experience leads to a higher start-up size, with the effect of business experience on (log) start-up size being roughly constant across the quantiles. Prior personal business experience leads to an increase in expected start-up size of about 48%. IVQTE estimates are even higher.

2 citations


Posted Content
TL;DR: In this article, the authors study the effects of diverse team composition on the survival and growth of new ventures using the Danish Linked Employer-Employee database and investigate the asymmetric effects of team composition by distinguishing between the ''primary'' and ''secondary'' founder.
Abstract: We study the effects of diverse team composition on the survival and growth of new ventures using the Danish Linked Employer-Employee database. To get cleaner measures of diverse team composition, we focus on entrepreneurial dyads, and also investigate the asymmetric effects of team composition by distinguishing between the `primary' and the `secondary' founder. We complement existing work by showing that heterogeneity in team composition is affected by the asymmetric hierarchical structure within the team, and that a unidimensional diversity indicator (which is usually applied) fails to capture a number of performance effects of heterogeneous team composition. Ventures with a STEM-educated primary founder and a Business-educated secondary founder have high employment growth, while the opposite combination (Business first, STEM second) has low employment growth. Pairs of younger individuals have lower survival chances but higher employment growth. Family firms have lower employment growth, especially when formed with your mother.



Posted Content
TL;DR: In this article, the authors investigated the growth and survival of 6247 new ventures that are tracked using the customer records at Barclays Bank and put forward Gambler's Ruin as a simple theory for understanding new venture growth.
Abstract: Does our ability to predict the performance of new ventures improve in the years after start-up? We investigate the growth and survival of 6247 new ventures that are tracked using the customer records at Barclays Bank. We put forward Gambler’s Ruin as a simple theory for understanding new venture growth and survival. Gambler’s Ruin predicts that the R2 remains low for growth rate regressions, but that the R2 increases in the years since start-up for survival regressions. The Nagelkerke R2 obtained from growth rate regressions decreases significantly in the years after start-up, which suggests that the fog gets thicker with respect to growth. When we focus only on firms surviving until the end of the period, however, there is no visible change in the R2 over time. In contrast, the Nagelkerke R2 of survival regressions increases in the years after start-up. Interestingly, a blip in year 5 suggests that macro-economic factors may have a strong effect on the amount of ‘fog’.