Kaoru Hosono, Miho Takizawa, Kenta Yamanouchi, 21 June 2020

How do firms grow as they age after establishment? What drives high growth rates for young firms? Using a large dataset from Japan for the period from 1995 to 2015, this column argues that the accumulation of intangible capital plays a significant role in the growth of physical productivity, which, in turn, accounts for a major part of sales growth as firms age. Of the three types of intangible capital – organisational capital, software, and R&D stocks – organisational capital explains a large part of the sales growth.

Timothy DeStefano, Richard Kneller, Jonathan Timmis, 06 May 2020

The last decade has seen a fundamental shift in the way firms access technology, from physical hardware towards cloud computing. This shift not only significantly reduces the cost of such technologies but also allows for the possibility of remote and simultaneous access. This column presents evidence on the impact of cloud adoption by firms using firm level data from the UK. There are marked differences in the effects on young and incumbent firms, where cloud adoption largely impacts the growth of young firms while it affects the geography of incumbent firms.

Marcela Eslava, John Haltiwanger, Alvaro Pinzón, 09 June 2019

A key difference between more and less developed countries lies in the speed at which the average business grows over its life cycle. This column compares manufacturing firms in Colombia and the US, and concludes that average life cycle growth differences across countries with diverging income levels are largely driven by the superstars and the worst performers. Relative to the US, Colombia presents an overwhelming prevalence of microestablishments, a deficit of superstar plants, and less strict market selection pressure for underperforming plants.

Laura Veldkamp, 01 March 2019

The digital economy makes it possible for data-savvy firms to grow very large, very quickly. Laura Veldkamp of Columbia Business School tells Tim Phillips about her new project to model the Big Data economy.

Emin Dinlersoz, Henry Hyatt, Sebnem Kalemli-Ozcan, Veronika Penciakova, 09 January 2019

The financing behaviour of private US firms has been somewhat neglected in the firm dynamics literature. This column presents a new dataset for studying these firms’ behaviour and explores how the Great Recession affected their growth. The results show substantial heterogeneity in leverage by firm age and size among private firms, but not among public firms. 

Benjamin Pugsley, Petr Sedláček, Vincent Sterk, 11 May 2018

In order to design effective policies to foster high-growth startups, we must first understand what sets these ‘gazelles’ apart from other startups. This column combines data covering US employers since the late 1970s with a macroeconomic model of firm dynamics to show that much of the performance of a firm is driven by factors that are determined at or just before the time of startup. Understanding how policies affect which types of people aspire to become entrepreneurs, how they develop business models, and which ideas they ultimately pursue is therefore important.

Christian Keuschnigg, 22 March 2016

Innovation drives macroeconomic growth, determines the competitive position of firms, and leads to factor reallocation. This column introduces a new CEPR Press eBook which argues that firms must implement more risky innovations as the economy approaches the technological frontier. The five contributions, from leading economists in the field, suggest that priority should be given to research, selection of firms, and reducing frictions. 

Tatiana Didier, Ross Levine, Sergio Schmukler, 25 August 2015

It is still not clear which firms issue equity and bonds, what happens to their assets, sales, and employment, and how the performance of issuers compares to that of non-issuers. This column addresses these three questions. First, only a small number of large firms issue securities in a typical country. Second, issuers grow faster than non-issuers in terms of assets, sales, and employment. Third, smaller issuing firms grow faster than larger ones, but larger non-issuing firms grow faster than smaller ones.

Holger Mueller, Paige Ouimet, Elena Simintzi, 12 March 2015

Rising wage inequality has received attention from academics and policymakers alike. This column describes new evidence for determinants of the ‘skill premium’, i.e., the wage difference between high and low-skilled workers. The findings indicate that skill premia are larger at larger firms. At the same time, larger firms have grown substantially. Therefore, the growth of larger firms in the economy could partially explain the growing wage inequality. 


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