Transcript Paper on High-Growth Firms

Determinants of High-Growth
Firms and Related Dutch Policies
Author: Gerrit de Wit
Date: March 28th, 2012
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Overview
• Paper: Why do some countries have more high-growth
firms than others?
• Possible implication to local determinants
• Some examples of Dutch policies with respect to highgrowth firms
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Paper on High-Growth Firms
• Joint work with Mercedes Teruel (Universitat Rovira i
Virgili)
• Overview:
• The paper in short
• Motivation
• Determinants that are investigated
• Results
• Policy implications
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The paper in short
• Panel data set: 17 countries, 7 consecutive years
• To be explained: percentage of high-growth firms
• Explanatory variables concerning entrepreneurship,
institutional settings, opportunities for growth
• Simple OLS regression to sort out the most important
determinants
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Motivation for paper
• Interest of Dutch policy
• Believed to be important for the economy
• Contribute to dynamics of economy
• Contribute to innovation and growth of labour
productivity
• Contribute to employment growth
• Act as a role model for existing and nascent
entrepreneurs
• Percentage of high-growth firms in the Netherlands
was lower compared to foreign countries
• Attempt to explain differences between countries
quantitatively with all information available
• Unique data set on high-growth firms
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Variable to be explained:
% high-growth firms
• Average growth of 20% per year over the last three
years
• Growth in turnover
• Size at the end 3-year growth period: 50 – 1000
employees
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Entrepreneurship variables
• Tertiary education
• Income motive
• Desirable career choice
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Institutional obstacles
• Employment protection
• Start-up procedures
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Opportunities for growth
• Population size
• GDP growth
• Technological development
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Table 4.
Explaining the average percentage of high-growth firms between countries on the basis of model (2) from table 3
part of the deviation that is explained by differences in:
Entrepreneurship
deviation
Institutional obstacles
Opportunities for growth
desirable
unexplained
part
from
tertiary
income
career
employment
start-up
populatio
average
education
motive
choice
protection
procedures
n size
Austria
-6%
-1.6%
0.2%
-1.2%
-0.7%
-0.9%
-1.0%
-1.1%
1.0%
Belgium
-6%
0.3%
-2.1%
-1.7%
0.6%
0.2%
-0.7%
-1.1%
-1.3%
-0.2%
Czech Republic
5%
-5.2%
0.1%
1.5%
-1.1%
-0.7%
1.3%
6.2%
2.4%
Denmark
-3%
1.7%
-2.2%
-0.9%
1.1%
1.2%
-1.3%
-1.7%
-1.3%
0.5%
Finland
-1%
6.4%
-0.3%
-3.3%
-0.3%
1.6%
-1.3%
0.6%
-1.0%
-1.5%
France
-5%
-1.0%
-0.8%
1.3%
-0.8%
-0.5%
0.8%
-1.1%
-1.3%
-1.5%
Germany
-7%
-2.8%
-1.7%
-0.1%
-1.3%
-0.7%
1.1%
-2.7%
-1.1%
2.5%
Hungary
13%
-2.7%
3.6%
-0.2%
0.4%
-0.7%
2.0%
6.4%
0.4%
Ireland
4%
-1.3%
0.0%
2.2%
0.9%
1.2%
-1.5%
6.5%
-1.5%
-1.9%
Italy
-1%
-0.7%
3.9%
2.7%
0.5%
-0.7%
0.8%
-2.4%
-1.1%
-2.6%
Japan
-12%
-1.8%
-0.5%
-5.3%
-0.8%
-1.5%
1.4%
-2.5%
-1.6%
-1.7%
Netherlands
-7%
-0.8%
-3.0%
4.0%
-2.0%
0.1%
-0.3%
-1.1%
-1.0%
-1.9%
Poland
7%
-0.6%
-1.3%
0.4%
1.6%
7.5%
-2.1%
Spain
6%
0.8%
1.2%
2.4%
-1.1%
-1.3%
0.5%
1.7%
-0.2%
3.9%
Sweden
3%
3.7%
0.4%
-1.0%
-1.6%
1.6%
-0.8%
0.9%
-1.3%
1.6%
United Kingdom
2%
0.4%
-1.0%
-0.5%
1.9%
0.4%
0.8%
0.0%
-1.1%
0.4%
United States
14%
4.0%
3.5%
-0.9%
3.7%
0.8%
2.1%
0.3%
-1.7%
0.5%
GDP
technological
growth development
The second column gives the difference between the country's percentage of high growth firms and the average over all cou ntries.
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Policy implications
•
•
•
•
•
•
Stimulate enrolment in tertiary education
Stimulate ambition of entrepreneurs
Promote entrepreneurship as a desirable career choice
Lower the degree of employment protection
Lower the administrative burden for firms
Create common markets with other countries to
enlarge the relevant market for firms
=> Implications for local policies ?!
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High-growth policies in the
Netherlands
• Various programs to stimulate growth
• “Growth Accelerator”, aim: lead at least 100 firms to
an annual turnover of 20 million a year in five years
• “Fast Forward”, aim: facilitate 75 entrepreneurs that
have growth ambitions with a 2-year program
• “Red Carpet for Growth”, aim: stimulate growth of
innovative firms and fast growers (300 startups and
150 fast-growing firms a year)
• All programs are setup along approx. the same lines
=> We take
“Growth Accelerator” as an example
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Selection of firms and finance
• Selection criteria:
• Gross turnover between 1 and 8 million a year
• Business potential to grow to 20 million in 5 years
• Ambition of entrepreneur
• Entrepreneur will actively participate in program
• Head office in the Netherlands
=> More than 100 firms are selected, they start in groups of
approx. 20
• Finance:
• Partly by government
• Partly by firm itself:
• 70 thousand for 5 years
• ½ day a week during 5 years
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What is offered to the firms?
•
•
•
•
Tailor made business plan
Senior advise, growth support
Expert workshops
Unique network of growth entrepreneurs
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Results after the first year
•
•
•
•
Turnover growth: 22% more than control group
Employment growth: 8% more than control group
Export growth: 55% more than control group
Growth in R&D: 45% more than control group
=> Subscribers of the program were selected. Hence you
cannot say that these results are due to the program!
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