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A cautionary note on using the Eurostat-OECD definition of high-growth firms

Author

Listed:
  • Daunfeldt, Sven-Olov

    () (HUI Research)

  • Halvarsson, Daniel

    (The Ratio Institute)

  • Johansson, Dan

    (HUI Research)

Abstract

Recent studies have suggested that most firms do not grow, and that a small number of high-growth firms create most new jobs. High-growth firms have therefore attracted an increasing amount of attention from researchers and policymakers. However, there is no uniform definition of what constitutes a high-growth firm in the literature. Eurostat and the Organisation for Economic Co-operation and Development (OECD) recently recommended that high-growth firms should be defined as firms with at least ten employees in the start-year and annualized employment (or sales) growth exceeding 20% during a 3-year period. This definition would exclude almost 95% of surviving firms in Sweden and about 40% of new private jobs during 2005-2008. We therefore advise caution in using this definition.

Suggested Citation

  • Daunfeldt, Sven-Olov & Halvarsson, Daniel & Johansson, Dan, 2012. "A cautionary note on using the Eurostat-OECD definition of high-growth firms," HUI Working Papers 65, HUI Research.
  • Handle: RePEc:hhs:huiwps:0065
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    References listed on IDEAS

    as
    1. Paul Schreyer, 2000. "High-Growth Firms and Employment," OECD Science, Technology and Industry Working Papers 2000/3, OECD Publishing.
    2. Magnus Henrekson & Dan Johansson, 2010. "Gazelles as job creators: a survey and interpretation of the evidence," Small Business Economics, Springer, vol. 35(2), pages 227-244, September.
    3. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2005. "Comparative analysis of firm demographics and survival: evidence from micro-level sources in OECD countries," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 365-391, June.
    4. Simon C. Parker & Emilio Congregado & Antonio A. Golpe, 2012. "Testing for hysteresis in entrepreneurship in 23 OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 19(1), pages 61-66, January.
    5. Mark Rogers & Christian Helmers & Christoffer Koch, 2010. "Firm growth and firm size," Applied Economics Letters, Taylor & Francis Journals, vol. 17(16), pages 1547-1550.
    6. Hart Hodges & Stein Østbye, 2010. "Is small firm gardening good for local economic growth?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(8), pages 809-813.
    7. Delmar, Frederic & Davidsson, Per & Gartner, William B., 2003. "Arriving at the high-growth firm," Journal of Business Venturing, Elsevier, vol. 18(2), pages 189-216, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. Michel Dumont & Chantal Kegels, 2016. "Working Paper 06-16 - Young Firms and Industry Dynamics in Belgium," Working Papers 1606, Federal Planning Bureau, Belgium.
    3. Sven-Olov Daunfeldt & Niklas Elert & Dan Johansson, 2014. "The Economic Contribution of High-Growth Firms: Do Policy Implications Depend on the Choice of Growth Indicator?," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 337-365, September.
    4. repec:ksa:szemle:1695 is not listed on IDEAS

    More about this item

    Keywords

    High-growth firms; high-impact firms; gazelles; OECD definition;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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