The UK’s high growth firms and their resilience over the Great Recession – Research Paper No 62
Published: 7 September 2017
During the last decade High-Growth Firms (HGFs) – sometimes referred to as ’Scale-Ups’ – have increasingly become an established feature of the UK business policy landscape. Indeed, HGFs are mentioned in the government’s recently published policy document ”Building our Industrial Strategy”, and are now considered sufficiently important that the Minister for Small Business has taken on the role of ”Scale-Up Champion”.
Whilst we know something of the characteristics of these firms – about their age, size, sector and location – we know relatively little about the dynamics of the HGF population as it evolves over time. For the most part attention is focused simply on the annual count which, as we shall see, is not an entirely appropriate measure of HGF activity.
Business Demography Research Theme
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.
Published: 3 April 2017
High-Growth Firms (HGFs) are a very small proportion of UK businesses population yet they have a disproportionate impact on job creation. We re-visit the issue to confirm that typically, over a three year period, high growth SMEs represent less than 1% of established businesses, but generate 20% of all job growth amongst established businesses which grow
Published: 7 July 2015
This paper contributes to contemporary debates concerning the impact of regulation on small business performance in the UK.
Published: 1 July 2013
Enterprise Research Centre
Warwick Business School
University of Warwick
Coventry CV4 7AL
Enterprise Research Centre
Aston Business School
Birmingham B1 7ET
0121 204 5392