Swimming upstream throughout the turmoil: evidence on firm growth during the Great recession

Abstract

In contrast to the so-called cleansing effect, during the Great Recession we observe highly heterogeneous firm performances. In particular, a not negligible subset of firms grew considerably despite of the general tendency towards downsizing. In this paper we explain the behaviour of theseswimming upstream firms(SUFs). We obtain three main results. First, SUFs exhibitcertainfirm-specific characteristics: they are younger and relatively more productive than non-SUFs. Second, SUFs adopt highly proactive strategic profiles, which assignsignificant importancetoactivities related to innovation, intangibles and internationalization. Third, SUFs tend to react to changes in market opportunities, although they suffer from sticky processes of resourcereallocation between exiting and surviving firms. Moreover, their growth seems to take place primarily within a regime of cumulative destruction rather thancreative destruction. Some of the implications of these results for managers and policy makers are discussed.