R&D activities for becoming a high-growth firm through large jumps: evidence from Korean manufacturing

Although firms are typically considered to grow continuously,discontinuous growth paths of low-growth firms, the so-calledlarge jumps, are also frequently observed. However, whileresearchers have discussed large jumps theoretically, empiricalevidence is lacking. Based on the gaps in the literature, this studyexamines how low-growth firms achieve large jumps and how suchfirms become high-growth firms by sustaining their growthmomentum thereafter. By constructing a unique merged dataset ofKorean manufacturing firms, we find that 24% of low-growth firmsachieved large jumps and 27.4% of these maintained their growthmomentum, becoming high-growth firms. The results show thatR&D investment and R&D collaboration increase the probability ofachieving large jumps. However, becoming a high-growth firm bysustaining the growth momentum after large jumps requirespersistency of R&D investment and internal capabilities instead ofcollaboration. Our findings suggest management and policyimplications to escape from the low-growth trap.