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No 103:
Are High-Growth Firms Overrepresented in High-tech Industries?

Sven-Olov Daunfeldt (), Niklas Elert and Dan Johansson ()

Abstract: It is frequently argued that policymakers should target high-tech firms, i.e., firms with high R&D intensity, because such firms are considered more innovative and therefore potential fast-growers. This argument relies on the assumption that the association among high-tech status, innovativeness and growth is actually positive. We examine this assumption by studying the industry distribution of high-growth firms (HGFs) across all 4-digit NACE industries, using data covering all limited liability firms in Sweden during the period 19972008. The results of fractional logit regressions indicate that industries with high R&D intensity can be expected to have a lower share of HGFs than can industries with lower R&D intensity. The findings cast doubt on the wisdom of targeting R&D industries or subsidizing R&D to promote firm growth. In contrast, we find that HGFs are overrepresented in knowledge-intensive service industries, i.e., service industries with a high share of human capital.

Keywords: entrepreneurship; firm growth; gazelles; high-growth firms; high-impact firms; innovation; (follow links to similar papers)

JEL-Codes: L11; L25; (follow links to similar papers)

37 pages, April 22, 2014

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