Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1210: Getting the Facts Right on Born Globals

Shon Ferguson (), Magnus Henrekson () and Louise Johannesson ()
Additional contact information
Shon Ferguson: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Magnus Henrekson: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Louise Johannesson: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

Abstract: Policymakers in several countries have recently taken steps to promote the rapid export expansion of small- and medium-sized enterprises (SMEs). The goal of these policies has been to create successful export-intensive startups, which are often referred to as born globals. These measures are motivated by studies claiming that born global firms are disproportionately important for job creation and economic growth. Using detailed register data on the universe of Swedish manufacturing startups founded 1998–2011, we find that born globals are a very small group of firms whose long-run size and growth do not outperform other exporting firms. We also show that removing continuing firms and spinouts from the analysis is crucial for obtaining correct results. Thus, the notion that born globals are superior to firms that follow a more gradual internationalization process, a conclusion largely based on case studies and surveys, does not withstand scrutiny. Policymakers must therefore be aware that encouraging more born globals need not necessarily lead to large benefits for the overall economy, especially in terms of employment.

Keywords: Born globals; Exporting; Firm growth; Globalization; Job creation

JEL-codes: F14; F23; L25; M13

32 pages, First version: May 3, 2018. Revised: January 17, 2019. Earlier revisions: September 6, 2018.

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