New businesses spring up all the time in the U.S. But which ones have the greatest ability to become big? A method developed by MIT researchers, based on an empirical study, projects the growth potential of high-tech firms with new precision — and could help local or regional policymakers assess their growth prospects.
Among other factors, firms that formally register, seek capital investment, and make news early in their lives have higher growth potential. That much might seem intuitive — but even a firm’s name, Stern and Guzman found, offers a solid hint of its growth potential. For instance, a business whose name includes the name of a founder does not generally expand as much as other types of firms.
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