This paper addresses three simple questions: how should the contribution of high-growth firms to job creation be measured?
how much does this contribution vary across countries? to what extent does the cross-country variation depend on variation
in the proportion of high-growth firms in the business population? The first is a methodological question which we answer
using a more highly articulated version of the standard job creation and destruction accounts. The other two are empirical
questions which we answer using a purpose-built data set assembled from national firm-level sources and covering nine countries,
spanning the ten three year periods from 2000-2003 to 2009-2012. The basic principle governing the development of the accounting
framework is the choice of appropriate comparators. Firstly, when measuring contributions to job creation, we should focus
on just job creating firms, otherwise we are summing over contributions from firms with positive, zero, and negative job creation
numbers. Secondly, because we know growth depends in part on size, the "natural" comparison for high-growth firms is with
job creation by similar-sized firms which simply did not grow as fast as high-growth firms. However, we also show how the
measurement framework can be further extended to include, for example, a consistent measure of the contribution of small job
creating firms. On the empirical side, we find that the high-growth firm share of job creation by large job creating firms
varies across countries by a factor of 2, from around one third to two thirds. A relatively small proportion of this cross-country
variation is accounted for by variations in the influence of high-growth firms on job creation. On average high-growth firms
generated between three or four times as many jobs as large non-high-growth job creating firms, but this ratio is relatively
similar across countries. The bulk of the cross-country variation in high-growth firm contribution to job creation is accounted
for by the relative abundance (or rarity) of high-growth firms. Moreover, we also show that the measurement of abundance depends
upon the choice of measurement framework: the "winner" of a cross-national high-growth firm "beauty contest" on one measure
will not necessarily be the winner on another.
JEL-Codes:D22, E24, L11, L25, L26, M13
Keywords:high-growth firms, firm growth, job creation
Forschungsbereich:Industrie-, Innovations- und internationale Ökonomie
Sprache:Englisch