Gazelles as job creators: a survey and interpretation of the evidence

Abstract

It is often claimed that small and young firms account for a disproportionately large share of net employment growth. We conduct a meta-analysis of the empirical evidence regarding whether net employment growth rather is generated by a few rapidly growing firms-so-called Gazelles-that are not necessarily small and young. Gazelles are found to be outstanding job creators. They create all or a large share of new net jobs. On average, Gazelles are younger and smaller than other firms, but it is young age more than small size that is associated with rapid growth. Gazelles exist in all industries. They seem not to be overrepresented in high-technology industries, but there is some evidence that they are overrepresented in services.

Are high-growth firms overrepresented in high-tech industries?

“…Notably, Rossi-Hansberg and Wright (2007) demonstrate that high growth rates and a higher standard deviation are related to the amount of human capital specific to the industry, e.g., special skills and training. These characteristics are also more present in service industries than in capital-intensive industries, which is consistent with the assessment of a possible overrepresentation of HGFs in service industries (Henrekson and Johansson 2010). Generally, the importance of education and human capital in fostering firm entry, survival and growth has been demonstrated in a number of studies (Bates 1990;Gimeno et al 1997;Acs et al 2007;Geroski et al 2010;Colombo and Grilli 2010;Arivantis and Stucki 2012).…”

“…In view of the previous literature concerning the link between R&D and growth, we would expect a non-existent relationship, or possibly even a negative one, because HGFs appear, if anything, to be overrepresented in service industries according to the previous literature (Henrekson and Johansson 2010). …”

“…Furthermore, these firms do not necessarily have extensive R&D or patent activity (Mason and Brown 2012). If anything, when considering a variety of countries, there appear to be more HGFs in service industries relative to other sectors such as manufacturing (Henrekson and Johansson 2010).…”

“…Most firms grow slowly or not at all, while a small number of highgrowth firms (HGFs) are major drivers of net job creation and economic growth (Birch and Medoff 1994;Storey 1994;Henrekson and Johansson 2010;Hölzl 2010;Coad et al 2014a). HGFs have therefore received increasing attention from policymakers and researchers in recent years.…”

“…Rather, a number of studies, addressing different countries and time periods, suggest that HGFs exist in most industries and are not overrepresented in high-technology sectors (Henrekson and Johansson 2010).…”