Born Globals—Is there fire behind the smoke?

Abstract

Are Born Globals really different from firms with other start-up histories? We address this question based on a unique longitudinal data set that tracks all Danish manufacturing start-ups founded between 1994 and 2008 (23,201 firms). This novel application of register data allows us to provide the first detailed account of Born Globals compared to proper control groups of other start-ups. Chiefly we investigate firm performance, which in turn permits interference on socioeconomic impact. We find that the occurrence of BGs is not specific to certain sectors, nor does their frequency change in light of rapid ICT progress. However, we find that Born Globals have significantly higher turnover and employment levels as well as job growth rates. Moreover, they show a considerably wider market reach, but little to no productivity advantage compared to firms with less or later internationalization. Thus, Born Globals are special in some but not all aspects.

Getting the facts right on born globals

“…We now present our regression results. We first present the regression results separately for each age group, an approach used by both Choquette et al (2017) and Braunerhjelm and Halldin (2019). As a robustness check, we also employ a panel regression approach, similar to Choquette et al and show the importance of correctly removing continuing firms and spinouts.…”

“…Our work is most similar to two existing studies that include firm size in the analysis and employ large-scale firm-level longitudinal register data. Choquette et al (2017) find that Danish born globals in manufacturing have higher sales and e m p l o y m e n t c o m p ar e d to o t h er e x po r t e r s . Braunerhjelm and Halldin (2019) mainly focus on nonsize measures of firm performance, but they do include employment as a size measure and find that Swedish born globals in the manufacturing sector have higher employment levels 5 years after the establishment of a born global firm compared to other similarly aged exporting firms.…”

“…Our work is distinct from Choquette et al (2017) and Braunerhjelm and Halldin (2019) in many respects. Our data covers the period 1998-2014, which allows us to study the performance of firms after the financial crisis.…”

“…Instead of following Choquette et al (2017) and comparing born globals with all other new firms, an approach that would entail the complex task of controlling for selection into exporting in the subsequent analysis, we follow Braunerhjelm and Halldin (2019) and opt to compare born globals with other exporting firms.…”

“…This definition stems from Moen and Servais (2002) and Knight and Cavusgil (2004), and is used in studies of Swedish born globals by Nordman and Melén (2008), Melén and Nordman (2009), and Braunerhjelm and Halldin (2019). Choquette et al (2017) also use this definition in their study of Danish born globals. As a robustness check, we also use a 50% export threshold.…”