Distribution of growth rates in highly successful Swedish technical innovations

Abstract

This study concerns gestation times (time between patent application and market introduction) and post-market introduction growth rates of 90 highly successful Swedish technical innovations. Innovations in small firms (1–49 employees) are characterized by short gestation times and high growth rates. Those in medium-sized firms (50–499 employees) show intermediate gestation times and relatively low growth rates. Innovations in large firms belonging to the Wallenberg sphere of influence show long gestation times and high growth rates (an unexpected result), in contrast to those in other large Swedish firms, which are characterized by intermediate gestation times and relatively low growth rates. The assumption that the distribution of innovation growth rates in all the firms can be interpreted as being log normal with a Pareto inverse power tail for the very high growth rates is compatible with the data. Innovations in the small firms and in the Wallenberg firms are overrepresented in the Pareto inverse power tail portion of the distribution. These results are both unexpected and significant.