The elusive quest for highgrowth firms in Africa: The (lack of) growth persistence in Senegal

Abstract

The purpose of this paper is to study the persistence of firm growth in Africa using data of formal firms in Senegal from 2006 to 2015, dedicating special attention to high-growth firms. This interest in identifying high-growth firms belongs to the idea that these firms will continue to outperform in the future and create jobs. We document, however, that growth rates are negatively correlated across time, especially for high-growth firms. A top performer is more likely to become a bad performer in the next period than sustain its previous performance. Our analysis also reveals that other indicators of performance (as profitability and productivity in the first period) are unrelated to the persistence of growth. This finding challenges the possibility for policymakers and investors to select persistent high-growth firms by scrutinizing their previous performances.
Citation

Léon F. (2019) The elusive quest for highgrowth firms in Africa: The (lack of) growth persistence in Senegal, FERDI Working paper P258