Serial correlation in annual growth rates carries a lot of information on growth processes - it allows us directly to observe firm performance as well as to test theories. Using a seven-year balanced panel of 10,000 French manufacturing firms, we observe that small firms typically are subject to negative correlation of annual growth rates, whereas larger firms display positive correlation. Furthermore, we find that those small firms that experience extreme positive or negative growth in any one year are unlikely to repeat this performance in the following year. © Springer Science+Business Media, LLC 2007.