Inderscience Publishers

The growth patterns of Canadian high-tech firms

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The purpose of this paper is to investigate and explain the recent growth patterns of Canadian high-tech firms. We analyse firm growth utilising Gibrat's Law as an analytic framework. Gibrat's Law postulates that the growth of firms is a random process. We therefore investigate whether the growth of Canadian high-tech firms is constant across firm size or whether growth is systematically related to firm demographic factors such as size, age, and legal or ownership status. Contrary to Gibrat's Law, we find that small firms in the Canadian high-tech sector experience higher growth rates than do large firms. We also find evidence to suggest that young firms experience higher growth rates than do older firms. Other growth relationships explored in this study include whether the growth of Canadian high-tech firms is systematically linked to legal status and foreign ownership. The results indicate that firms with limited liability do tend to grow faster, but there is no evidence to suggest that foreign ownership is related to growth performance.

Keywords: small business, statistical analysis, innovation

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