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Are high-growth firms overrepresented in high-tech industries?

Author

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  • Sven-Olov Daunfeldt
  • Niklas Elert
  • Dan Johansson

Abstract

It is frequently argued that policymakers should target high-tech firms, i.e., firms with high R&D intensity, because such firms are considered more innovative and therefore potential fast-growers. This argument relies on the assumption that the association among high-tech status, innovativeness, and growth is actually positive. We examine this assumption by studying the industry distribution of high-growth firms (HGFs) across all four-digit NACE industries, using data covering all limited liability firms in Sweden during the period 1997–2008. The results of fractional logit regressions indicate that industries with high R&D intensity, ceteris paribus, can be expected to have a lower share of HGFs than can industries with lower R&D intensity. The findings cast doubt on the wisdom of targeting R&D industries or subsidizing R&D to promote firm growth. In contrast, we find that HGFs are overrepresented in knowledge-intensive service industries, i.e., service industries with a high share of human capital.

Suggested Citation

  • Sven-Olov Daunfeldt & Niklas Elert & Dan Johansson, 2016. "Are high-growth firms overrepresented in high-tech industries?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(1), pages 1-21.
    • Handle: RePEc:oup:indcch:v:25:y:2016:i:1:p:1-21.
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    File URL: http://hdl.handle.net/10.1093/icc/dtv035
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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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