Table 7 Fortune's Top 100 Fastestr Growing Firms of 2015-2018: Growth Through Recessions
Description
How do fast growing firms weather recession? Do they change strategy? Do they invest aggressively when others retrench, or go ex-growth and stick to their knitting? Gulati, Nohria and Wohlgezogen (2010) identified four strategies at play in their study of 4700 firms during three recession periods. We apply their methods to a study of Fortune’s top 100 fastest growing firms of 2015-2018, 40% of which are 20 years or older and 80% are 10 years or older. We follow these firms through three recession periods, including what we are calling “the lead up to a new recession” (2013-2018), the Great Recession (2005-2012) and the Tech Bust (1999-2004). Firm and industry data for SG&A, PP&E, R&D, RPE are derived from the FT Mergent Database, 1999-2018. We calculate the compound average growth for each area of business investment for each firm and each industry (where this data is available in Mergent) for the entire period. We found in every recession period (including the period we are calling "Lead Up to a New Recession, 2013-2018), top growing firms making a focused strategic decision to delay SG&A investment or PP&E or R&D depending firm strategy and customer needs, rather than fit with industry. Based on our study of compromises made by firms between 2013-2018, we can see that the top 100 firms preferred to subsidize investment in SG&A, PP&E or R&D not by reducing cost of goods sold, but instead by reinvesting CapEx back into the business.