Dr Alex Coad
Senior Research Fellow (SPRU - Science and Technology Policy Research) University of Sussex
Friday 16th May, 15:30-17:00
INET ground floor meeting room INET Oxford
Eagle House, Walton Well Road, OX2 6ED
A large empirical literature suggests that firm growth is difficult to predict and best approximated by a random walk. We examine firm growth at a higher level of resolution by focusing on a narrow- ly-defined instance of growth - the first hire. The challenge to solo entrepreneurs to double their workforce is the single biggest growth event facing any growing firm. We analyze Danish matched employer-employee data. Those who hire enjoy superior sales outcomes in subsequent years, while the dispersion in profits increases. Furthermore, those that hire enjoy faster sales growth in the pre- vious year, suggesting that sales growth Granger-causes the first hire. Finally, we show that founders with a stronger profile in terms of education and previous employment and income are more likely to increase profits while the characteristics of the employee are less important.