Firm dynamics and job creation in the United Kingdom: 1998–2013

This article is motivated by a very simple question – ‘what types of firms create the most jobs in the UK economy?’ One popular answer to this question has been High-Growth Firms (HGFs). These firms represent only a small minority – the ‘Vital 6%’ – of the UK business population yet, but have a disp...

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Bibliographic Details
Published in:International small business journal 2015-02, Vol.33 (1), p.12-27
Main Authors: Anyadike-Danes, Michael, Hart, Mark, Du, Jun
Format: Article
Language:English
Subjects:
Business
Cohorts
Dynamics
Employment creation
Innovation
Job creation
Small business
Startups
Studies
United Kingdom
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Summary:This article is motivated by a very simple question – ‘what types of firms create the most jobs in the UK economy?’ One popular answer to this question has been High-Growth Firms (HGFs). These firms represent only a small minority – the ‘Vital 6%’ – of the UK business population yet, but have a disproportionate impact on job creation and innovation. We re-visit the discussion launched by the 2009 National Endowment for Science, Technology and the Arts (NESTA) reports, which identified the 6% figure and, using more recent data, confirm the headline conclusion for job creation: a small number of job-creating firms (mostly small firms) are responsible for a significant amount of net job creation in the United Kingdom. Adopting our alternative preferred analytical approach, which involves tracking the growth performance of cohorts of start-ups confirms this conclusion; however, we find an even smaller number of job-creating firms are responsible for a very significant proportion of job creation. We conclude by considering the question – ‘what are the implications for policy choices?’
ISSN:0266-2426
1741-2870
DOI:10.1177/0266242614552334