Identifying High-Growth Firms

This paper investigates the role(s) of high-growth firms (HGFs) in the robust growth-rate distribution. HGFs are identified as firms for which the growth-rate distribution exhibits power-law decay. In contrast to the traditional means of identifying HGFs, a distributional approach eliminates the need to specify an arbitrary growth rate or percentage share. The latter approach is illustrated by the growth-rate distribution for Swedish data on incorporated firms at the aggregate level and at the 2-digit industry level. The empirical results indicate that a power law is sometimes present in the growth-rate distribution and suggest that HGFs are rarer than previously thought.