Scandinavian Working Papers in Economics

Working Papers,
Örebro University, School of Business

No 2018:7: 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, Postal: Aston Business School and Enterprise Research Centre, Aston Triangle, Birmingham , B4 7ET, UK,
Carl Magnus Bjuggren: Research Institute of Industrial Economics (IFN), Sweden, Postal: Research Institute of Industrial Economics (IFN), Grevgatan 34, 114 53 Stockholm
Michel Dumont: Federal Planning Bureau and Ghent University, Belgium, Postal: Federal Planning Bureau, Avenue des Arts, 47-49, 1000 - Brussel
Sandra Gottschalk: ZEW, Germany, Postal: Centre for European Economic Research , L 7, 1 , 68161 Mannheim , Germany
Werner Hölzl: Austrian Institute of Economic Research (WIFO), Postal: Austrian Institute of Economic Research (WIFO), Arsenal Objekt 20, 1030, Vienna, Austria
Dan Johansson: Örebro University School of Business, Postal: Örebro University, School of Business, SE - 701 82 ÖREBRO, Sweden
Mika Maliranta: ETLA and University of Jyväskylä, Finland, Postal: ETLA, Mika Maliranta, Arkadiankatu 23 B, FI-00100 Helsinki, Finland
Anja Myrann: Ragnar Frisch Centre for Economic Research, Norway, Postal: Ragnar Frisch Centre for Economic Research, Gaustadalleen 21, 0349 Oslo, Norway
Kristian Nielsen: Aalborg University, Denmark, Postal: Aalborg University, Fredrik Bajers Vej 5, 9220 Aalborg Ø, Danmark
Guanyu Zheng: Productivity Commission, New Zealand, Postal: Level 15, Fujitsu Tower, 141 The Terrace, Wellington 6011, PO Box 8036, Wellington 6143

Abstract: This paper addresses three simple questions: how should the contribution of HGFs to job creation be measured? how much does this contribution vary across countries? to what extent does the cross-country variation depend on variation in the proportion of HGFs in the business population? The first is a methodological question which we answer using a more highly articulated version of the standard job creation and destruction accounts. The other two are empirical questions which we answer using a purpose-built dataset assembled from national firm-level sources and covering nine countries, spanning the ten three year periods from 2000/03 to 2009/12. 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 ’beauty context’ on one measure will not necessarily be the winner on another.

Keywords: high-growth firms; firm growth; job creation

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

31 pages, May 8, 2018

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