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What holds back high-growth firms? Evidence from UK SMEs

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  • Neil Lee

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Abstract

High-growth firms are seen as vital for economic growth. It is important for policy and theory to consider the barriers faced by firms achieving high growth and those with the potential to do so. This article uses data for 4,858 UK SMEs to investigate the obstacles perceived by two sets of firms: (1) firms in periods of high growth and (2) potential high-growth firms, which are observationally similar but are not achieving high growth. The results suggest high-growth firms perceive problems in six areas: recruitment, skill shortages, obtaining finance, cash flow, management skills and finding suitable premises. Potential high-growth firms feel held back by the economy, obtaining finance, cash flow and their management skills, but are less likely to perceive regulation is a problem. The results have implications for theory on high-growth firms and policies focussed at them. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Neil Lee, 2014. "What holds back high-growth firms? Evidence from UK SMEs," Small Business Economics, Springer, vol. 43(1), pages 183-195, June.
  • Handle: RePEc:kap:sbusec:v:43:y:2014:i:1:p:183-195
    DOI: 10.1007/s11187-013-9525-5
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    References listed on IDEAS

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    Cited by:

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    2. Brixiova, Zuzana & Égert, Balázs, 2017. "Entrepreneurship, institutions and skills in low-income countries," Economic Modelling, Elsevier, vol. 67(C), pages 381-391.
    3. Besnik A. Krasniqi & Sameeksha Desai, 2016. "Institutional drivers of high-growth firms: country-level evidence from 26 transition economies," Small Business Economics, Springer, vol. 47(4), pages 1075-1094, December.
    4. Demir, Robert & Wennberg, Karl & McKelvie, Alexander, 2016. "The Strategic Management of High-Growth Firms: A Review and Theoretical Conceptualization," Ratio Working Papers 273, The Ratio Institute.
    5. repec:taf:entreg:v:28:y:2016:i:1-2:p:97-125 is not listed on IDEAS
    6. Sven-Olov Daunfeldt & Daniel Halvarsson, 2015. "Are high-growth firms one-hit wonders? Evidence from Sweden," Small Business Economics, Springer, vol. 44(2), pages 361-383, February.
    7. repec:kap:sbusec:v:49:y:2017:i:1:d:10.1007_s11187-017-9865-7 is not listed on IDEAS
    8. Alex Coad & Christina Guenther, 2014. "Processes of firm growth and diversification: theory and evidence," Small Business Economics, Springer, vol. 43(4), pages 857-871, December.
    9. Minghao Li & Stephan J. Goetz & Mark Partridge & David A. Fleming, 2016. "Location determinants of high-growth firms," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 28(1-2), pages 97-125, January.
    10. Bergner, Sören Martin & Bräutigam, Rainer & Evers, Maria Theresia & Spengel, Christoph, 2017. "The use of SME tax incentives in the European Union," ZEW Discussion Papers 17-006, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    14. Alex Coad & Kristian Nielsen & Bram Timmermans, 2017. "My first employee: an empirical investigation," Small Business Economics, Springer, vol. 48(1), pages 25-45, January.
    15. repec:kap:jinten:v:15:y:2017:i:2:d:10.1007_s10843-016-0195-7 is not listed on IDEAS

    More about this item

    Keywords

    High-growth firms; Barriers to growth; Gazelles; SMEs; Entrepreneurship; L0; D21; L2; L10; L26;

    JEL classification:

    • L0 - Industrial Organization - - General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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