High Growth Firms – A Sensitivity Analysis
SWEDEN
Anita Du Rietz, Ministry of Enterprise, Energy and Communication
Fredrik Andersson, Statistics Sweden
Ministry of Enterprise, Energy and Communications
Definitions
• High Growth firms: growth greater than 20% per annum, over a three
year period, and with 10 or more employees .
• Gazelles: high growth firms which at are no more than 5 years in the
beginning of the observation period.
• High Growth Firms = Gazelles + Flyers.
Ministry of Enterprise, Energy and Communications
Measuring high growth
Selection variables
• Two classes of variables:
• employment
a) number of employees
b) wages/salaries,
• economic performance
a) turnover = sales
b) value added
Ministry of Enterprise, Energy and Communications
Number of High Growth firms 2002-2005, (10+ empl. and +20%),
in 2002.
percentage of each category
Selection variable
Value added
Employment
High growth firms
7%
4%
15-16%
9%
5%
3%
Gazelles
Flyers
Ministry of Enterprise, Energy and Communications
Number Employees in High Growth firms 02-05, (10+ empl. and
+20%), in 2002.
percentage of each category
Selection variable
Value added
Employment
High growth firms
10%
7%
Gazelles
20%
15%
Flyers
8%
6%
Ministry of Enterprise, Energy and Communications
Selection variable – employment or economic performance?
Economic performance
= new employees
Flyer
Gazelles
Time period of study
Ministry of Enterprise, Energy and Communications
Time
The share of high growth firms, gazelles and flyers
selection variable = employment, 1998-2005
0,60
0,50
0,40
HGE
0,30
GZE
Flyers
0,20
0,10
0,00
Year 98
Year 99
Ministry of Enterprise, Energy and Communications
Year 00
Year 01
Year 02
Year 03
Year 04
Year 05
The share of high growth firms, gazelles and flyers
selection variable = value added, 2000 - 2005
1,00
0,90
0,80
0,70
0,60
HGE Value Add
0,50
GZE Value Add
Flyers Value Add
0,40
0,30
0,20
0,10
0,00
Year 00
Year 01
Ministry of Enterprise, Energy and Communications
Year 02
Year 03
Year 04
Year 05
Top Industries for gazelles
NACE
74 Other business activities;
Call centre activities - Provision of personnel activities - Construction and other engineering activities Business and management consultancy activities - Advertising agency activities.
72 Computer and related activities
Other software consultancy and supply - Hardware consultancy
45 Construction
51 Wholesales, trade & commission excl. motor
85 Health and social work
52 Retail trade excl motor veh. & cycle; repair h/hold gds.
Ministry of Enterprise, Energy and Communications
veh. & cycle
Characteristics for high growth firms
•
•
•
•
•
they employ relatively younger people
they pay lower salaries to their employees
the young employees have higher education
key personal have a ph.d. in the age of 30-45
the employees are to less extent on sick leave
Ministry of Enterprise, Energy and Communications
Age and gender, percentage within each type of firm 2005.
Gazelles
Flyers
All others
Ministry of Enterprise, Energy and Communications
Age
Male
Female
<30
20,4
17,3
>45
13,8
7,8
<30
14,2
9,2
>45
24,8
9,9
<30
12,2
8,3
>45
24,6
13,2
Establishments – a better unit?
- The dynamics of firms and enterprises •
•
•
Organic or non-organic growth, i.e., the entering point is via
split/merge or “new”
Establishments are located in different regions or in industries
Regional clusters can be traced
Ministry of Enterprise, Energy and Communications
Establishment – a better unit?
• 1.765 establishments are HGE
– 1.091 firms with one establishment = HGE
– 445 firms with several establishments that have in total 674 HGE
• 129 of 445 firms are HGE in both methods
– 488 establishments are HGE but these 316 firms are not HGE
– More than 60% are in sections J+K, G+I
Ministry of Enterprise, Energy and Communications
Organic or non-organic gazelles
3,0%
2,5%
Organic
2,0%
Non-organic
High grow th
1,5%
1,0%
0,5%
0,0%
94-91 95-92
Ministry of Enterprise, Energy and Communications
96-93 97-94 98-95
99-96 00-97
01-98 02-99 03-00
04-01 05-02
High growth plants as a percentage share of all above 5
empl. 2002-2005.
Section
A+B
Industry
Argiculture, hunting,
High growth
Gazelles
Flyers
3,8%
1,1%
2,7%
4,0%
1,7%
2,3%
7,8%
3,6%
4,2%
forestry, and fishing
C+D
Manufacturing and
mining
E
Electricity, gas and
water supply
F
Construction
6,4%
2,9%
3,5%
G+I
Wholesale & retail trade;
4,3%
1,9%
2,4%
4,8%
2,4%
2,4%
7,6%
5,1%
2,5%
repair: ect.
H+O+P
Personal and culturel
services
J+K
Financial intermediation
Real estate, renting, and
business activities
L
Other organizations
9,2%
6,9%
2,3%
M
Education and research
5,9%
3,8%
2,1%
N
Health and social work
4,7%
2,8%
1,9%
Total
5,5%
2,7%
2,8%
Ministry of Enterprise, Energy and Communications
Sensitivity Analysis
Gazelles of all surviving plants, %, 2002-2005, within size classes, growth rates =
10%, 20%, 30%.
9
8
7
6
5
10%
4
20%
30%
3
2
1
0
4-9
Ministry of Enterprise, Energy and Communications
10-14
15-19
20-29
+30
Summary - high growth - Sweden
Choice of selection variables:
economic performance =
Gazelles ( 15%) + Flyers (5%) = All HG (7%)
employment =
Gazelles ( 9%) + Flyers (3%) = All HG (4%)
Gazelles employ = young, more females, higher education, lower salaries
Ministry of Enterprise, Energy and Communications
Summary - high growth - Sweden
Plants a better unit for employment analyses
+ 5 employees, +20% growth
Gazelles overrepresented in service sectors,
Flyers in a few sectors
Sensitivity analysis for gazelle plants
% of all plants with +5,
6,2% (+10% growth),
2,7% (+20% growth),
1,3% (+30% growth)
Ministry of Enterprise, Energy and Communications