Not All High-Growth Firms Are Alike: Capturing and Tagging Ohio’s Gazelles

Abstract

In this study, the authors present a statistically valid typology of high-growth firms (HGFs), also known as gazelles, to determine if payroll and job growth patterns differ between groups or clusters. Cluster–discriminant analysis was conducted on a cohort of 26,104 HGFs s in Ohio, using data from the Quarterly Census of Employment and Wages from 2010 to 2015. Only 1.2% of all Ohio’s firms can be classified as high growth. The larger herd of gazelles grows consistently, while the other, much smaller pack experiences short, intense growth spurts. Roughly 30% of the two gazelle clusters (Consistent High Growth and Volatile High Growth) are in the information service, financial service, and professional and business service industries, compared with 18% in the low- and slow-growth cluster. The nongazelle HGF cluster has proportionately more businesses in manufacturing and the leisure and hospitality industries than the gazelle clusters.

Keywords

gazelles high-growth firms cluster–discriminant analysis

Get full access to this article

View all access options for this article.

References

Acs

Z. J.

Parsons

Tracy

(2008). High-impact firms: Gazelles revisited. Small Business Administration

Aldenderfer

M. S.

Blashfield

R. K.

(1984). Cluster analysis (Sage University Paper Series on Quantitative Applications in the Social Sciences, 07-044). Sage. https://doi.org/10.4135/9781412983648

Birch

D. L.

(1979). The job generation process (Program on Neighborhood and Regional Change). MIT.

Birch

D. L.

(1981). Who creates jobs? Public Interest, Fall, 3-13. https://www.nationalaffairs.com/public_interest/detail/who-creates-jobs

Birch

D. L.

(1987). Job creation in America. Free Press.

Birch

Haggerty

Parsons

(1995). Who’s creating jobs? Cognetics.

Birch

D. L.

Medoff

(1994). Gazelles. In Solomon

L. C.

Levenson

A. R.

(Eds.), Labor markets, employment policy, and job creation (pp. 159-167). Westview Press. https://doi.org/10.4324/9780429046834-7

Case

. (1989, January). The disciples of David Birch. Inc. https://www.inc.com/magazine/19890101/5491.html

Clayton

R. L.

Sadeghi

Spletzer

J. R.

Talan

D. M.

(2013, June). High-employment-growth firms: Defining and counting them. Monthly Labor Review, 136(6), 3-13.

10.

Coad

Cowling

Siepel

(2017). Growth processes of high-growth firms as a four-dimensional chicken and egg. Industrial and Corporate Change, 26(4), 537-554. https://doi.org/10.1093/icc/dtw040

11.

Coad

Daunfeldt

S. O.

Holzl

Johansson

Nightingale

(2014). High-growth firms: Introduction to the special section. Industrial and Corporate Change, 23(1), 91-112. https://doi.org/10.1093/icc/dtt052

12.

Delmar

Davidson

Gartner

W. B.

(2003). Arriving at the high-growth firm. Journal of Business Venturing, 18(2), 189-216. https://doi.org/10.1016/S0883-9026(02)00080-0

13.

Demir

Wenneberg

McKelvie

(2017). The strategic management of high-growth firms: A review and theoretical conceptualization. Long Range Planning, 50(4), 431-456. https://doi.org/10.1016/j.lrp.2016.09.004

14.

Everitt

B. S.

(1993). Cluster analysis (3rd ed.). Halsted.

15.

Hakstian

A. R.

Roed

J. C.

Lind

J. C.

(1979). Two-sample T-2 procedure and the assumption of homogeneous covariance matrices. Psychological Bulletin, 86(6), 1255-1263. https://doi.org/10.1037/0033-2909.86.6.1255

16.

Haltiwanger

Jarmin

R. S.

Miranda

(2013). Who creates jobs? Small versus large versus young. Review of Economics and Statistics, 95(2), 347-361. https://doi.org/10.1162/REST_a_00288

17.

Henrekson

Johansson

(2010). Gazelles as job creators: A survey and interpretation of the evidence. Small Business Economics, 35(2), 227-244. https://doi.org/10.1007/s11187-009-9172-z

18.

Hill

E. W.

Brennan

J. F.

(2000). A methodology for identifying the drivers of industrial clusters: The foundation of regional competitive advantage. Economic Development Quarterly, 14(1), 65-96. https://doi.org/10.1177/089124240001400109

19.

Hill

E. W.

Brennan

J. F.

Wolman

H. L.

(1998). What is a central city in the United States? Applying a statistical technique for developing taxonomies. Urban Studies, 35(11), 1935-1969. https://doi.org/10.1080/0042098983962

20.

Hurst

Pugsley

B. W.

(2011). What do small businesses do? Brookings Papers on Economic Activity, Fall, 73-142. https://doi.org/10.3386/w17041

21.

Ketchen

D. J.

Shook

C. L.

(1996). The application of cluster analysis in strategic management research: An analysis and critique. Strategic Management Journal, 17(6), 441-458. https://doi.org/10.1002/(SICI)1097-0266(199606)17:6<441::AID-SMJ819>3.0.CO;2-G

22.

Labor Market Information. (2015). Number of nongovernmental establishments covered under the Ohio unemployment compensation law, by size-of-firm and county. Ohio Department of Jobs and Family Services. https://ohiolmi.com/portals/206/QCEW/Firm_n/2015_RS20362BN.pdf

23.

McKelvie

Wiklund

(2010). Advancing firm growth research: A focus on growth mode instead of growth rate. Entrepreneurship Theory and Practice, 34(2), 261-288. https://doi.org/10.1111/j.1540-6520.2010.00375.x

24.

Nightingale

Coad

(2014). Muppets and gazelles: Political and methodological biases in entrepreneurship research. Industrial and Corporate Change, 23(1), 113-143. https://doi.org/10.1093/icc/dtt057

25.

Organisation for Economic Co-operation and Development. (2007). Eurostat-OECD manual on business demography statistics. http://www.oecd.org/std/business-stats/eurostat-oecdmanualonbusinessdemographystatistics.htm

26.

Qian

(2018). Knowledge-based regional economic development: A synthetic review of knowledge spillovers, entrepreneurship, and entrepreneurial ecosystems. Economic Development Quarterly, 32(2), 163-176. https://doi.org/10.1177/0891242418760981.

27.

Shepherd

Wicklund

(2009). Are we comparing apples with apples or apples with oranges? Appropriateness of knowledge accumulation across growth studies. Entrepreneurship Theory and Practice, 33(1), 105-123. https://doi.org/10.1111/j.1540-6520.2008.00282.x

28.

Tabachnick

B. G.

Fidell

L. S.

(2007). Using multivariate statistics. Pearson.

29.

U.S. Bureau of Labor Statistics. (2005, December 15). Business employment dynamics size class data: Questions and answers. https://www.bls.gov/bdm/sizeclassqanda.htm

30.

Ward

(1963). Hierarchical grouping to optimize an objective function. Journal of the American Statistical Association, 58(301), 236-244. https://doi.org/10.1080/01621459.1963.10500845

31.

Warner

R. M.

(2008). Applied statistics: From bivariate through multivariate techniques. Sage.

32.

Yim

Ramdeen

K. T.

(2015). Hierarchical cluster analysis: Comparison of three linkage measures and application to psychological data. Quantitative Methods in Psychology, 11(1), 8-21. https://doi.org/10.20982/tqmp.11.1.p008