Growth Development Paths of Firms—A Study of Smaller Businesses


  • We would like to thank Alex Coad for his helpful comments during the comprehensive work on the paper. Special thanks go to the anonymous referees and the Centre for European Economic Research (ZEW) for its data provision.


This paper investigates whether firm characteristics that are related to firm growth in the literature are also related to the development path of firms. This means that we test which firm characteristics accompany growth dynamics during a longer period of time, referring to the sequence of growth and decline steps. We examine three variables: firm size, innovation effort, and export share. To this end, we use panel data on 178 German manufacturing firms over the period from 1992 to 2007. We find that the determinants of growth paths are not the same as the determinants of firm growth at one point in time.