Why do some SME's become high-growth firms? The role of employee competences

Carita Mirjami Eklund

doi:10.1108/jic-07-2019-0188

Abstract

PurposeHigh-growth firms generate a large share of new jobs and are thus the key drivers of innovation and industry dynamics. As the employees' education supports innovation and productivity, this article hypothesizes that employee competences explain high growth.Design/methodology/approachThe study approaches this by examining intangible capital and specialized knowledge to evaluate how these characteristics support the probability of becoming a high-growth firm. The estimation uses linked employer–employee data from Danish registers from 2005 to 2013.FindingsAs the authors measure high growth with the size-neutral Birch index, they can examine the determinants of high growth across different firm size classes. The findings imply that intangible capital relates positively to the firm's high growth.Originality/valuePrevious research on high-growth firms is concentrated on the owners’ education. This article broadens to the high education of all employees and accounts for the employees’ occupation and capitalization of knowledge with intangible capital.

Highlights

IntroductionThe question is important for the society as the firms experiencing this type of growth (high-growth or fast-growing firms) are the biggest generators of new jobs that do not directly replace an old occupation (H€olzl, 2013; Schreyer, 2000)
What are the main factors driving the rapid growth in firm size? The question is important for the society as the firms experiencing this type of growth are the biggest generators of new jobs that do not directly replace an old occupation (H€olzl, 2013; Schreyer, 2000)
The regression is for high growth in 2008–2010, and the third is for high growth in the period 2011 to 2013

Summary

Introduction

The question is important for the society as the firms experiencing this type of growth (high-growth or fast-growing firms) are the biggest generators of new jobs that do not directly replace an old occupation (H€olzl, 2013; Schreyer, 2000). For (total factor) productivity growth, new firms represent one channel, where the entrepreneur has either a new idea, a strong network or the conviction that he or she could earn more on his or her own than he or she could through stable employment.

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