Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

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

Sven-Olov Daunfeldt (), Niklas Elert and Dan Johansson ()
Additional contact information
Sven-Olov Daunfeldt: HUI Research, Postal: HUI Research, SE-10329 Stockholm, Sweden and Dalarna University, SE-79188, Falun, Sweden
Niklas Elert: RATIO, Postal: Box 3203, SE-10364 Stockholm, Sweden and Örebro University, SE-70281 Örebro, Sweden
Dan Johansson: HUI Research, Postal: HUI Research, SE-10329 Stockholm, Sweden and Örebro University, SE-70281 Örebro, Sweden

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 1997–2008. 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

JEL-codes: L11; L25

37 pages, April 22, 2014

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