Growth Heroes

and Their Wider Economic Impact

Jun Du

ERC, Aston University

ERC State of Small Business Britain Conference

30 November, 2016

Two curious facts

An entrepreneurial state with high growth records…

and a baffling productivity puzzle!

High growth firms: to define and identify

High growth firms, in

employment(OECD, 2007)

High impact firms

Growth heroes(Du and Bonner 2015)

Top performers

Millennium 2000 firms(Hart et al 2016)

High growth entrepreneurs

Gazelles

High employment growth

firms

(Clayton et al, 2013)

High growth firms, in value

Employment based Productivity based

Bigger firms

Micro firms

Bigger firms Micro firms

% in total survivors 1.2 1.7 2.1 0.5 5.2 1.2

OECD-HGFs Small HGFs

GrowthHeroes

GrowthSuper

Heroes

GrowthHeroes

GrowthSuper

Heroes

Jobs (stock)

Jobs (net job creation)

Turnover (stock) ££££ £ ££ £ £ £

Turnover (growth) ££ £££ ££ ££ £££££ ££££

Productivity (level) ★★★ ★★★★★ ★★ ★★★★ ★★ ★★★★

Productivity (growth) ★★★ ★★★ ★★★★ ★★★

We find:

Definition matters!

• Applying policy on different type of high growth firms will

affect different business populations which will result in

different outcomes.

• Way forward: Growth Super Heroes + OECD HGFs

Employment-based high

growth firms generate lots of

jobs but have mixed

productivity records

Productivity-based

high growth firms have

mediocre job creation

records but show

productivity superiority

High growth firms and

productivity: beyond single firms

• Growth persistence is not at firm level, but at regional

level

– The predictability of high growth episodes remains limited

– firm growth is typically highly discontinuous and high

employment growth is not persistent among firms

– Recent research on growth persistence beyond single firms – at

regional level

• Regional and industrial externalities

– Knowledge spillovers within and across industries

– Localisation externalities

– Urbanisation externalities

What does it mean for a region to have more high growth firms?

Finding - Industry externalities on productivity growth Suppliers SGHs OECD HGFsProf serv Overall

★★★★★★

Manufacturing

Overall ★★★

★★★

Low tech ★★★

★★★

High tech ★★★

Large ★

Small ★★★

★★★

Old ★★★

★★★

Young ★★★

★★★

Horizontal sector SGHs OECD HGFsProf serv

★★★★★★

Manufacturing

Overall ★★★

★★★

Low tech ★★★

★★★

High techLarge

★★★ ★

Small ★★

★★

Old ★★★

★★

Young ★

Customers SGHs OECD HGFsProf serv Overall

★★★★★★

Manufacturing

Overall ★★★

★★★

Low tech ★★★

★★★

High techLargeSmall

★★★★★★

Old ★★★

Young ★★★

H

S

C

++

+

Finding: Regional externalities of growth

super heroes on productivity growth

Key messagesBeyond job creation and productivity improvement within their own

organizations, high growth firms have externalities to other firms in the region,

within and across industrial sectors.

Horizontal effects:

• Competition-led efficiency improvement with positive productivity

spillovers

Vertical effects:

• Improved productivity and efficiency – knowledge spillovers effects

• Increased demand for services and products – positive market creation

effect

• Competition-led crowding out effects for skills and labour in the upstream

sectors

Regional disparity:

• Advantageous urban areas

• Interestingly, the areas of more high growth incidences are not

necessarily those which benefit most from it!

Thank you!

Questions and comments?

See more information at http://enterpriseresearch.ac.uk/

Contact us about this research: Jun Du j.du@aston.ac.uk

This work reflects the joint effort by the team members of the ERC II project 3,

including Jun Du, Karen Bonner, Enrico Vanino, Mark Hart and Michael

Anyadike-danes.

This work contains statistical data from ONS which is Crown Copyright. The use of these

data does not imply the endorsement of the data owner or the UK Data Service at the UK

Data Archive in relation to the interpretation or analysis of the data. This work uses

research datasets which may not exactly reproduce National Statistics aggregates.