What drives exceptional job creation in Portuguese companies?

February 12, 2021

It is generally recognized in the economic literature that a small number of companies, known as Gazelles, contribute disproportionately to net job creation. This article analyzes the drivers of high employment growth such as firm age, access to external sources of finance, and firms’ human capital, as well as companies’ ability to export and innovate through investment in R&D.

The results suggest that younger companies are more likely to grow faster, and that human capital is an essential determinant of high growth phenomena. However, the results suggest that high growth companies are not hampered by the lack of external financing access, having mostly resorted to equity to support their financing needs.

Moreover, given a company’s experience in the market, being an exporter is a relevant factor for high growth events. Similarly, companies’ innovative capacity seems to be a crucial element for episodes of extraordinary job creation.

The paper explores the possibility of growth episodes exhibiting some form of persistence over time. In line with the literature, the paper finds that past growth events are negatively associated with current growth. Arguably, periods of fast growth may be the outcome of an internal transformative process perhaps associated with a firm’s innovation capacity or external market expansion.

Overall, our results suggest that innovative capacity, availability of own funds, and the ability of experienced export companies significantly differentiate the average performance from the exceptional performance in job creation.

Click here to go to the paper by Francisco Rodrigues, Nuno Tavares, and Gabriel Osório de Barros.


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