Smaller firms and Europe's high technology sectors: a framework for analysis and some statistical evidence

Abstract

This paper introduces a simple framework through which the evolution of industries can be `mapped'. This framework is used to discuss the role of small firms in the development of Europe's high technology sectors during the 1980s. The framework assesses the development of high technology sectors in two dimensions (1) through the change over time in the number of units (establishments or enterprises) in these sectors and (2) through the changing employment of these sectors. Changes within both manufacturing and service sectors are discussed and differences are found between the sectors examined. Especially among the manufacturing sectors, differences are also found between countries. In some countries the high technology manufacturing sectors are growing both in terms of the number of units active in these activities and their employment, while in other countries, the number of units is increasing but employment is contracting. Within this context, it may well be that the growth in the number of high technology small firms has at least as much to do with `negative' factors, such as the `down-sizing' of large firms, as it has to do with `positive' factors, such as the creation of innovative new enterprises.