The Effects of High Growth on New Business Survival

High-growth, young businesses have received increased attention in the research and policy sphere because of their job creation potential. However, relatively less attention has focused on the effects of high growth on firm survival and its implications for job creation and destruction dynamics. This paper analyzes the effect of high employment growth on the survival of new establishments and the survival patterns of high-growth firms in the U.S. State of Georgia. We use the National Establishment Time-Series (NETS) data to examine the new establishments that started between 1990 and 1999 and trace their employment dynamics through 2008. We analyze how early-stage employment growth impacts the survival rate of these establishments. Our analysis provides evidence that high employment growth early in their life cycle significantly reduces the likelihood of subsequent failure.