High-growth Firms

First defined by the OECD nearly 20 years ago, the High-growth Firm (HGF) is the ‘go to’ metric on small firm growth for academics and policymakers alike. The term came about as a way for policymakers to ‘pick winners’ in order to ensure the more efficient and cost effective delivery of business support schemes and initiatives. The OECD HGF measure was a pragmatic solution to a practical problem — designed to identify the small group of firms which contribute disproportionately to job creation, and to aid international comparisons.

Since the Great Financial Crisis there was an over-riding concern about HGFs, also known as ‘scaleups’, and their seeming importance to economic recovery as policymakers took a renewed interest in firms which generate jobs on a large scale.  The major challenge is not only to accurately identify potential HGFs in the wider business population but also to fine-tune the nature of business support and policy interventions to answer specific needs of these particular businesses. It is now well established that HGFs represent a heterogeneous group of businesses of different sectors, ages and sizes and that makes the task of developing a ‘single offer’ particularly difficult.

The HGF metric focuses attention on relatively short three-year ‘bursts’ of growth which may render invisible the reality of growth for the majority of businesses.  Longitudinal studies are emerging with focus on the episodic nature of firm growth over longer time periods to more accurately identify that small number of ‘high-growth’ or ‘fast-growing’ firms that are crucial to economic growth and how best to support them.

Further reading

• Nesta — High Growth Firms

• Michael Anyadike-Danes and Mark Hart — The UK’s high growth firms and their resilience over the Great Recession

• Bank of England — Unlocking growth: what can the literature tell us about what’s holding back high-growth firms?