Determinants of High-Growth Firms and Related Dutch Policies

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Determinants of High-Growth Firms and Related
Dutch Policies
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Overview

• Paper Why do some countries have more
  high-growth firms than others?
• Possible implication to local determinants
• Some examples of Dutch policies with respect to
  high-growth firms

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Paper on High-Growth Firms

• Joint work with Mercedes Teruel (Universitat
  Rovira i Virgili)
• Overview
• The paper in short
• Motivation
• Determinants that are investigated
• Results
• Policy implications

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The paper in short

• Panel data set 17 countries, 7 consecutive years
• To be explained percentage of high-growth firms
• Explanatory variables concerning
  entrepreneurship, institutional settings,
  opportunities for growth
• Simple OLS regression to sort out the most
  important determinants

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Motivation for paper

• Interest of Dutch policy
• Believed to be important for the economy
• Contribute to dynamics of economy
• Contribute to innovation and growth of labour
  productivity
• Contribute to employment growth
• Act as a role model for existing and nascent
  entrepreneurs
• Percentage of high-growth firms in the
  Netherlands was lower compared to foreign
  countries
• Attempt to explain differences between countries
  quantitatively with all information available
• Unique data set on high-growth firms

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Variable to be explained high-growth firms

• Average growth of 20 per year over the last
  three years
• Growth in turnover
• Size at the end 3-year growth period 50 1000
  employees

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Entrepreneurship variables

• Tertiary education
• Income motive
• Desirable career choice

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Institutional obstacles

• Employment protection
• Start-up procedures

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Opportunities for growth

• Population size
• GDP growth
• Technological development

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Policy implications

• Stimulate enrolment in tertiary education
• Stimulate ambition of entrepreneurs
• Promote entrepreneurship as a desirable career
  choice
• Lower the degree of employment protection
• Lower the administrative burden for firms
• Create common markets with other countries to
  enlarge the relevant market for firms
• gt Implications for local policies ?!

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High-growth policies in the Netherlands

• Various programs to stimulate growth
• Growth Accelerator, aim lead at least 100
  firms to an annual turnover of 20 million a year
  in five years
• Fast Forward, aim facilitate 75 entrepreneurs
  that have growth ambitions with a 2-year program
• Red Carpet for Growth, aim stimulate growth of
  innovative firms and fast growers (300 startups
  and 150 fast-growing firms a year)
• All programs are setup along approx. the same
  lines
• gt We take Growth Accelerator as an example

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Selection of firms and finance

• Selection criteria
• Gross turnover between 1 and 8 million a year
• Business potential to grow to 20 million in 5
  years
• Ambition of entrepreneur
• Entrepreneur will actively participate in program
• Head office in the Netherlands
• gt More than 100 firms are selected, they start
  in groups of approx. 20
• Finance
• Partly by government
• Partly by firm itself
• 70 thousand for 5 years
• ½ day a week during 5 years

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What is offered to the firms?

• Tailor made business plan
• Senior advise, growth support
• Expert workshops
• Unique network of growth entrepreneurs

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Results after the first year

• Turnover growth 22 more than control group
• Employment growth 8 more than control group
• Export growth 55 more than control group
• Growth in RD 45 more than control group
• gt Subscribers of the program were selected.
  Hence you cannot say that these results are due
  to the program!

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