The state-level geographic analysis of high-growth companies

Abstract

While the number of studies about high-growth firms has increased in recent years, scholarship has been primarily focused on the microeconomic factors for success, such as individual and firm characteristics. There has been an emerging body of research studying the macroeconomic or geographic factors, yet scholars have incorporated those external factors only in limited ways.This paper deepens our understanding about the macroeconomic factors related to high-growth firms by adapting the conceptual framework of the knowledge spillover theory and by using the list of Inc. 500 firms. Regression results demonstrate that the geographic factors for high-growth firms differ substantially from the knowledge spillover theory, as academic and government research activities, venture capital investment, and patents are unrelated to the concentration of high-growth firms. Nonetheless, the model in this paper agrees with the importance of the human capital-related factor, specifically science and engineering college graduates. These findings suggest that we need to have a more streamlined understanding of entrepreneurship, as high-growth may have some overlap, but still sharply differs from firm formation, self-employment, or innovations in the high-tech sectors.