Thursday, June 23, 2016

What Happens to High-Growth Firms?


Because they focus on attracting mature firms through relocation incentives, job creation strategies at the state level are often misguided, according to the Center on Budget and Policy Priorities. Despite this, many metropolitan regions are increasingly focusing their efforts on attracting and retaining the high-growth firms responsible for an oversized share of job growth and economic output. While considerable research has focused on the important role that startups and high-growth firms play in the national economy, relatively little has been done to apply a regional lens to this phenomenon. New research, tracks high-growth firms over a multiple-year period to assess how their changing operations can inform regional economic development.

In The Role of Entrepreneurship in U.S. Job Creation and Economic Dynamism, researchers from the University of Maryland and the U.S. Census Bureau assess the importance of startups and young firms as contributors to job creation and productivity growth. The authors note that while startups account for approximately 10 percent of firms and more than 20 percent of firm level gross job creation, high-growth firms – those defined as firms expanding their employment by more than 25 percent per year – account for about 15 percent of firms and 50 percent of firm-level gross job creation.

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