Scandinavian Working Papers in Economics
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No 65:
A cautionary note on using the Eurostat-OECD definition of high-growth firms

Sven-Olov Daunfeldt (), Daniel Halvarsson and Dan Johansson

Abstract: Recent studies have suggested that most firms do not grow, and that a small number of high-growth firms create most new jobs. High-growth firms have therefore attracted an increasing amount of attention from researchers and policymakers. However, there is no uniform definition of what constitutes a high-growth firm in the literature. Eurostat and the Organisation for Economic Co-operation and Development (OECD) recently recommended that high-growth firms should be defined as firms with at least ten employees in the start-year and annualized employment (or sales) growth exceeding 20% during a 3-year period. This definition would exclude almost 95% of surviving firms in Sweden and about 40% of new private jobs during 2005-2008. We therefore advise caution in using this definition.

Keywords: High-growth firms; high-impact firms; gazelles; OECD definition; (follow links to similar papers)

JEL-Codes: L22; L25; L26; (follow links to similar papers)

10 pages, April 19, 2012

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