Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1062: Are High-Growth Firms Overrepresented in High-Tech Industries?

Sven-Olof Daunfeldt , Niklas Elert () and Dan Johansson ()
Additional contact information
Sven-Olof Daunfeldt: HUI Research, Postal: Regeringsgatan 60, SE-103 29 Stockholm, Sweden
Niklas Elert: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Dan Johansson: HUI Research, Postal: Regeringsgatan 60, SE-103 29 Stockholm, 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, ceteris paribus, 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; R&D

JEL-codes: L11; L25

38 pages, March 25, 2015

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