Stories of Scale: Nine cases of growth in Social Enterprises
High-growth, innovative enterprises in Europe...High-growth, innovative enterprises in Europe: How...
Transcript of High-growth, innovative enterprises in Europe...High-growth, innovative enterprises in Europe: How...
High-growth, innovativeenterprises in Europe: How many are there?
Dániel Vértesy
INNOVA Measure Workshop: “Innovation, high-growth and internationalization of R&D”, Brussels, 28 Nov 2017
Motivations
Interesting for multiple policy domains:• Post-crisis job creation: A small group of high-growth innovative enterprises (HGIEs)
generate a large share of new jobs • Structural change towards innovative sectors (close EU <> US gap in technology
intensity)
Yet, a growing high-growth enterprises [in EMPL terms] may simply indicate increase in labor-intensive (rather than knowledge-intensive) activities
Despite the interest, we still don’t know about the share of HGIEs in the European economy(data challenge: both innovation & growth)
1. What is the share of HGIEs in Europe?
2. Identifying HGIEs:• HGIEs grow fast… but how fast growth makes them HGIEs?• HGIEs innovate… but what kind of innovations makes them HGIEs?⇒ Understand the relationship between normative definitions and alternative definitions
based on empirical observations?
3. How does high-growth and innovation performance of sectors and countries relate to one another at the country and sectoral level?(Do the two co-occur?)
Research Questions
∆ Employment 20%∆ Employment 10%∆ Employment 10%
∆ Sales 20%
1
23
??
Methods we followed
1. Discuss the theoretical considerations for measuring high-growth and innovativeness of firms
2. Construct a Growth and Innovativeness Matrix to measure the share of HGIEs using 20-country CIS2012 microdata and analyze the difference between the various HGI measures
3. Reduce the number of dimensions to analyze how sectors and countries perform in terms of high-growth and innovation?
Measuring high-growth: theoretical considerations
• Evidence of uncertainty: • Eurostat <> OECD EIP disagree in growth thresholds (10% vs. 20%)
• Definition is crucial – results are sensitive to… :• indicator (turnover- or employment-based?)• Measure (absolute or relative? Or, combined? /Birch Ind/)• Period considered (growth spurts vs. sustained growth?)• The process of growth (organic vs M&A)• Threshold for high-growth (absolute (above X%)
or relative (Top N% of distribution))(Delmar, 1997; Delmar et al, 2003; Coad et al, 2014)
• => We should apply many alternative definitions to ensure more valid results
• CIS-based measurement: richer data on inputs and outputs• Oslo Manual (OECD, 2005); [4th ed. update in progress]• Quantitative data from innovation survey responses are of various quality (Mairesse
and Mohnen, 2010); • (Other proxies: i.e. patents, new designs, R&D, etc.)
• Alongside cross-country & cross sectoral differences, companies’ innovative profile differs in terms of...
• Innovation types (product, process, organizational, marketing)• Degree of novelty (new to world or new to firm /diffusion/)
• Importance of new products in turnover• Whether and where they perform R&D (in-house or external);
and R&D intensity (overall, by sector, country, etc.)
Measuring innovativeness: theoretical considerations
Our “core” measuresOur “core” measures
Our “contextual” measuresOur “contextual” measures
The Data: distribution of firms by country and size
20 countries weighted sample
{ IT, DE, ES, FR }: ~80%
All firms~450,000
[92,960]
Small(76%)
Large(4%)
Medium(20%)
Total Employment0 − 300
300 − 600600 − 1,200
1,200 − 2,2002,200 − 3,6003,600 − 9,4009,400 − 96,380
CIS2012microdata
Limitations:• Cannot measure persistency of
high-growth or use other measures of growth performance;
• For many sectors, data was collected on a voluntary basis
Absolute and relative growth thresholds: What is the difference?
0 100
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
RO LV NO BG LT EE SE CY LU CZ HU SK SI PT BE HR
Eur2
0 IT FR ES DE
Empl
oym
ent c
hang
e, 2
012/
2010
med P90 P95p75 ESTAT (10%) OECD (20%)
∆ Empl. 10% [Eurostat]∆ Empl. 10% [Eurostat]
∆ Empl. 20% [OECD]∆ Empl. 20% [OECD]
Top 10% of distributionTop 10% of distribution
Top 25% of distributionTop 25% of distribution
The share of HGIEs among European firmsThe HGIE matrix results
Inn1 Inn2 Inn50
Hg1
Hg2
Hg30
0.1 – 31% of European firms are HGIEs (depending on the definition)0.1 – 10% of firms are HGIEs in the 90% of cases
Reading the matrixinn1 inn2 inn3 inn4 inn5 inn6
Prod. Proc. Pd/Pc Org/Mkt Anyhg1 7% 8% 10% 11% 4% 14%hg2 5% 6% 7% 8% 3% 11%hg3 4% 4% 5% 6% 2% 7%hg4 1% 1% 2% 2% 1% 3%hg5 0% 0% 0% 0% 0% 0%hg6 12% 12% 16% 17% 6% 22%hg7 9% 10% 13% 14% 5% 18%hg8 7% 8% 10% 11% 4% 14%hg9 3% 3% 4% 5% 2% 6%hg10 1% 1% 1% 1% 0% 1%hg11 13% 14% 18% 20% 7% 25%hg12 13% 13% 18% 19% 7% 25%hg13 17% 17% 23% 24% 9% 31%hg14 17% 17% 23% 24% 9% 31%hg15 1% 1% 1% 1% 0% 1%hg16 1% 1% 2% 2% 1% 2%hg17 2% 2% 2% 3% 1% 4%hg18 3% 3% 4% 5% 2% 6%hg19 1% 1% 1% 1% 0% 2%hg20 2% 2% 2% 3% 1% 3%hg21 3% 3% 3% 4% 1% 5%hg22 4% 4% 6% 6% 2% 8%
Top
Empl
HGiINNj
Top
Sale
sEM
PLSA
LES
Birc
h Em
pl.
Birc
h Sa
les
Sales 20% [OECD]Sales 20% [OECD]
Empl. 10% [Eurostat]Empl. 10% [Eurostat]
The co-occurrence of high-growth & innovativeness across countries, sectorsAim: reduce dimensions• 30 x 50 HGIE indicators: too many to handle
⇒2 pillars of high-growth⇒1 core innovation pillar
• Around core variables (ESTAT-based definition + relative threshold; all types of innovation); statistically coherent
• Address uncertainty in the establishment of thresholds• Leave contextual variables apartOutcome: 3 pillars1. “HG_P1”: Employment growth: absolute threshold2. “HG_P2”: Various growth measures: top N% of distribution3. “INN_P1”: Core innovation types
Both “absolute” and “relative” HG pillars negatively correlated with the innovation core pillar at the country level
Countries strongest in Innovation relatively weaker in high-growth• Less innovative firms grow fast in RO, BG, LV,
LT or NO• [ES: not fully comparable due to larger number
of sectors]
Country level
inn_p1 hg_p1 hg_p2inn_p1 1hg_p1 -0.329 1hg_p2 -0.553 ** 0.904 *** 1
Country-level
At the sectoral level: no association between HG & INN
• Yet: positive correlation observed at 1-digit sectoral level [heterogeneity within 1-d sectors]
Sectoral level [2-digits] 1
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4647
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535556
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7374
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HG
_P1
0 .2 .4 .6INN_P1
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HG
_P2
0 .2 .4 .6INN_P1
inn_p1 hg_p1 hg_p2inn_p1 1hg_p1 0.183 1hg_p2 -0.012 0.774 *** 1
NACE 2-digit
inn_p1 hg_p1 hg_p2inn_p1 1hg_p1 0.406 * 1hg_p2 0.257 0.819 *** 1
NACE 1-digit
Core innovation activities:• KIABI:
• positive, moderate correlation; • more innovative sectors show both
high & low [65] HG performance• Non-KIABI:
• no association between HG & INN
HKnowledge-intensive sectors do not seem to underperform other (more labour-intensive) sectors
Sectors by knowledge-intensity
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1038
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0 .2 .4 .6 0 .2 .4 .6
non-knowledge-intensive, core knowledge-intensive, core
mean(hg_p1) 95% CI Fitted values
HG
_P1
INN_P1
Graphs by KIABI
Conclusion
Novelty of study: quantify the share of HGIEs in Europe using CIS2012 data• between 0.1 and 10% in case of 90% of HGIE def. combinations • Results most sensitive to growth measure and threshold & degree of novelty of innovations.• A useful method to characterize innovative profiles of high-growth enterprises
Observed difference between country-level and sector-level relationship between HG & I• Very high heterogeneity within country / sector aggregations• Chasing 2 targets at the same time: danger of trade-off between high-growth &
innovativeness [especially in catching-up countries]• Horizontal HGIE policy may be problematic
Thank you!Thank you!Welcome to email us at: [email protected]
Country and sectoral performance gaps largely related to firm size structure
Innovation and growth by average firm size