High performing firms and job creation: a longitudinal analysis (1998-2013) ERC Insight Paper
Published: 3 April 2017
The OECD High-Growth Firm (HGF) measure was a pragmatic solution to a practical problem. It was designed to assist in identifying the small group of firms which contributed disproportionately to job creation. This statistic could be used to inform national policy and to make comparisons across countries, since it could be readily replicated using business register data. The decade since the measure was first published has seen increasing dissatisfaction amongst the academics and policymakers seeking to make use of it. There are two important criticisms. First, it focuses attention on relatively short ‘bursts’ of growth rendering invisible the reality of growth for the majority of businesses, and second, it does not in fact capture some important members of its target group the ‘relatively small proportion of firms that contribute disproportionately to job creation’.
We present a new analysis of job creation in the UK, using data on a cohort of start-ups born in 1998 to identify three different groups of high performing firms. Of these three groups we find that HGFs as defined by the OCED do not create the most jobs, in fact they grow more slowly and have a lower survival rate than the comparators. Notably, though, most of the observed growth in all three groups takes place within the first five years after start-up.
Business Demography Research Theme
The Enterprise Research Centre (ERC) has developed an alternative approach to identifying groups of fast-growing firms which contribute disproportionately to job creation and output. This will have significant implications for policy discussions on the relative importance of SMEs and which types of firms drive growth in the economy.
Published: 10 June 2014
Decomposing UK aggregate labour productivity and growth: 1998-2013 using the ONS business structure database data. Research Paper No. 48
This study provides a comprehensive analysis of UK labour productivity patterns and contributing factors over the 1997-2013 period. Based on the ONS Business Structure Database (BSD), we present a full picture of the UK firms’ productivity patterns in the whole economy over the examined period and in particular during the “Great Recession”, at aggregate level, sector level, and among heterogeneous groups. We observe significant business demographic changes underlying UK aggregate productivity change, featuring an increasing number of small businesses especially single-employee firms, less entrants and more exits and discuss the implications of these changes in explaining the productivity decline. When differentiating firm growth types, we find “Growth heroes” and “Decline by efficiency loss” firms over-contribute to aggregate labour productivity compared to their weight in the business population. In contrast, an already large group of ‘Decline by contraction’ firms surged over the recent recession and under-contribute to aggregate labour productivity. We highlight that within firm productivity improvement has been mainly responsible for aggregate productivity changes in the UK while resource allocation on average played a limited role in driving the aggregate productivity change.
Published: 12 July 2016
Feasibility Study – Exploring the Long-Term Impact of Business Support Services. Research Paper No 29
This report is a feasibility study examining whether it is possible to observe a longer term impact of business improvement schemes in general using the old Business Link (BL) offer in England in 2003 as an example. The report covers the methodological issues of assessing the economic impact of business support interventions over an extended time period, although the findings will be of interest to policy makers. Building on the published evaluation of BL in 2006 this new analysis uses 7 additional years of employment and turnover data from the ONS Business Structure Database (BSD) to demonstrate the value of longitudinal evaluation time frames.
Published: 27 March 2015
Enterprise Research Centre
Warwick Business School
University of Warwick
Coventry CV4 7AL
Enterprise Research Centre
Aston Business School
Birmingham B1 7ET
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