Abstract

Among 104,231 limited liability firms in Sweden with at least two employees during 1997- 2010, almost 10% did not hire new employees in any given 3-year period despite having high profits. Nearly half of these firms continued to have high or medium profits in the next three-year period, but still no growth. Regression analysis indicates that these firms were not randomly distributed; rather they were small and young, did not belong to an enterprise group, and operated in local markets with high profit-opportunities. We conclude that it might be more beneficial to focus policy towards these firms instead of towards a few high-growth firms that, having just grown exponentially, may not be best positioned to grow further.

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