Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1216: An International Comparison of the Contribution to Job Creation by High-growth Firms

Michael Anyadike-Danes (), Carl Magnus Bjuggren (), Michel Dumont , Sandra Gottschalk , Werner Hölzl , Dan Johansson , Mika Maliranta , Anja Myrann , Kristian Nielsen and Guanyu Zheng
Additional contact information
Michael Anyadike-Danes: Aston Business School and Enterprise Research Centre, UK
Carl Magnus Bjuggren: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Michel Dumont: Federal Planning Bureau and Ghent University, Belgium
Sandra Gottschalk: ZEW, Germany
Werner Hölzl: Austrian Institute of Economic Research (WIFO), Austria
Dan Johansson: Orebro University and HUI Research, Sweden
Mika Maliranta: ETLA and University of Jyväskylä, Finland
Anja Myrann: Ragnar Frisch Centre for Economic Research, Norway
Kristian Nielsen: Aalborg University, Denmark
Guanyu Zheng: Productivity Commission, New Zealand

Abstract: The basic principle governing the development of the accounting framework is the choice of appropriate comparators. Firstly, when measuring contributions to job creation, we should focus on just job creating firms, otherwise we are summing over contributions from firms with positive, zero, and negative job creation numbers. Secondly, because we know growth depends in part on size, the ’natural’ comparison for HGFs is with job creation by similar-sized firms which simply did not grow as fast as HGFs. However, we also show how the measurement framework can be further extended to include, for example, a consistent measure of the contribution of small job creating firms. On the empirical side, we find that the HGF share of job creation by large job creating firms varies across countries by a factor of two, from around one third to two thirds. A relatively small proportion of this cross-country variation is accounted for by variations in the influence of HGFs on job creation. On average HGFs generated between three or four times as many jobs as large non-HGF job creating firms, but this ratio is relatively similar across countries. The bulk of the cross-country variation in HGF contribution to job creation is accounted for by the relative abundance (or rarity) of HGFs. Moreover, we also show that the measurement of abundance depends upon the choice of measurement framework: the ’winner’ of a cross-national HGF

Keywords: High-growth firms; Firm growth; Job creation

JEL-codes: D22; E24; L11; L25; L26; M13

23 pages, May 23, 2018

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