Profile of High-growth Firms and Gazelles in the U.S. Richard L. Clayton, Akbar Sadeghi, David Talan Bureau of Labor Statistics November 19, 2007

Caveats  The data on high-growth and gazelles are preliminary research data subject to change for methodology update and data revisions.

Methodology  High-growth and gazelles data are only a snapshot of expanding firms at the end of 2006 aimed at understanding the methodological issues.

Methodology (cont.)  High-growth industries and gazelles were calculated at the firm level.  Firms were identified by employers’ federal tax identification numbers.  Employment was aggregated for multi establishment firms that have the same employer identification numbers.

Methodology (cont.)  The age of the oldest member of multi establishment firms was selected as the firm age.  For the sensitivity analysis, high-growth firms employment was estimated based on 15, 20, 25, 30 and 40 percent annual growth over a three year period.

Time Frame for Analysis  The selected time period was from fourth quarter 2003 to fourth quarter  Gazelles are a subset of high-growth firms with less than five years in business in the beginning of the three-year time period.  Alternatively, five-year-in-business constraint could be applied to the end of the three-year growth requirement.

Age Estimates  Age estimates are based on firm birth date, which is defined as the date of first quarterly positive employment.  The date of first positive employment is assigned in the longitudinal database where no employment or zero employment for four consecutive quarters led to the positive employment.

Definition of Births  This definition of birth excludes the seasonal businesses but includes reactivating businesses if the reactivation occurred after more than five quarters of inactivity.

Analysis  For comparison, 20 percent (the basic definition) and 40 percent (the highest growth suggested) are tabulated together in the same tables (Tables 1a-4a).  Other growth rates are displayed in separate tables (Tables 1b-4b).

Summary  The results clearly show the status and ranking of industries based on presence and the number of firms and employment of firms with high-growth and gazelles status.  It appears that the rankings both in employment and the count of firms are to a small extent sensitive to the defined rate of growth.

Future Work Time Series Data –The same numbers in different time intervals or preferably a time series of such data will show the dynamics of growth across industries and regions Size Class Data –Methodological Issues –Base Size Method –Age data might be more useful