A number of studies have indicated that firm age is an important determinant of firm growth. However, we still lack knowledge on how firm age influences the persistence of firm growth rates. One the one hand, we may expect that young firms face a liability of newness. Learning-by-doing models also suggest that older firms may benefit from their greater business experience, and therefore have a higher degree of growth persistence than younger firms. On the other hand, older firms might have problems adapting their strategies to changing business conditions as well as increasing inertia and organizational rigidities. Young firms might also seek to achieve Minimum Efficient Scale as they struggle to overcome their ‘liability of newness’ and achieve economies of scale.
Coad, Alex; Daunfeldt, Sven-Olov; and Halvarsson, Daniel
"FIRM AGE AND GROWTH PERSISTENCE (INTERACTIVE PAPER),"
Frontiers of Entrepreneurship Research: Vol. 34
, Article 16.
Available at: http://digitalknowledge.babson.edu/fer/vol34/iss14/16