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Aston University

  1. 1. Professor Mark Hart Deputy Director, ERC Presentation to DL LEP Group Meeting in Saunderton 11th May 2017
  2. 2. Some Facts! • Some ‘mechanics’ underlying the OCED High-Growth Firm definition: – Take a longer time perspective – less than half scaling for the first time: some first scaled long ago – What happens next? – further episodes of high-growth? chance of another scaling declines dramatically with time since first scale-up ERC Analysis of UK Firm Growth – OECD HGF employment definition – updated to 2016
  3. 3. 3 Groups of ‘High Performance Firms’ – what happened them over 15 years? All the ‘action’ is in the first 5 years after start-up! OECD HGFs: 1. do not create the most jobs 2. measured from birth: grow more slowly 3. have a lower survival rate than one or other of the two comparator groups of high performing firms. Anyadike-Danes & Hart (2017) “High Performing Firms and Job Creation: a longitudinal analysis (1998-2013)”, ERC Insight Paper, March 2017 SHGFs – Clayton Variance to OECD definition relaxing the 10 emp. threshold; HGFs – OECD definition; EEPJC – extraordinarily prolific job creators – micro-firms with 1-4 employees at start-up.
  4. 4. Job Creation, Growth and Survival of High Performing Firms: 1998-2013 SHGF HGF EEPJC (1) (2) (3) Number of firms 1181 330 470 Jobs 1998 4040 13576 967 2013 69649 74431 59070 2013-1998 65609 60855 58103 Jobs per firm 1998 3.42 41.14 2.06 2013 58.97 225.55 125.68 1998/2013 17.24 5.48 61.01 Annual average growth (%) 1998/2013 20.9 12.0 31.5 Age 15 survival rate (%) 2013/1998 39.5 42.4 47.4
  5. 5. ERC’s Local Growth Dashboard – Focus on Geography of Growing Firms
  6. 6. Business Start-ups • The number of start-ups in an economy is often seen as the headline metric of ‘enterprise’ and ‘entrepreneurial ability’. • The South East, and especially London, has the largest rate of start-ups and there are generally smaller numbers of start-ups as we move north and west. • However, there are some notable exceptions in England as Cheshire & Warrington also exhibit high rates of start-up on a par with the South East.
  7. 7. Firm Survival and Growth 7 Start-ups achieving at least £1m T/O after 3 years Established businesses growing from £1- 2m to £3m+ T/O
  8. 8. High-Growth Firms and Small HGFs (2013-16)
  9. 9. Driving Business Support Interventions • Analysis does confirm the value of locally differentiated policies reflecting the local realities of business dynamics – being reflected in SEPs and funding deals?? • Something long recognised in Scotland, Wales and Northern Ireland but constantly being re-worked in England!
  10. 10. Summary • ‘Scaling’ is an important dynamic to nurture in the UK economy. • But, it needs to be deployed across each stage of the growth pipeline: – Nascent entrepreneurs or start-ups growing – Accelerating the growth of businesses already showing signs of ambition and growth – Getting scaled businesses to scale again and more quickly • Need to be careful about committing to any particular simple formula for identifying them.
  11. 11. Agenda for Action • Develop a private and public business support framework based on robust evidence. • Challenging owner-manager mindsets and developing/deepening growth ambition – especially among the ‘growth ambivalent’ & ‘growth inclined’ – the challenge is ‘early identification’ (data filters only go so far) • Enhancing Leadership, Management and Entrepreneurial Skills – creates the business context for the impact of on- going reviews on finance (e.g., Patient Capital Review); skills and growing domestic and international markets.
  12. 12. Why Leadership/Management/Entrepreneurial Skills are crucial? • GrowthAccelerator clients in England reported that the main barriers to their growth were Strategy and Management (53%) • Chartered Institute of Personnel and Development shows that nearly three- quarters of SMEs in England report a deficit in L&M Skills. Hayton, J (2015) “Leadership and Management Skills in SMEs: Measuring Associations with Management Practices and Performance” BIS Research Paper No. 211, March 2015
  13. 13. Goldman Sachs 10,000 Small Businesses Programme http://www.aston.ac.uk/10ksb/ • A national small business growth programme – fully- funded. • The programme is proven to drive growth and job creation • 10KSB UK graduates are growing their staff at 31% per year and increasing revenue at 81% per year. • They are three times more likely to be creating jobs and two times more likely to be growing revenue than other UK small businesses. • Independent analysis shows that participants create 17% more jobs and generate 19% higher revenues than they would have without the programme.
  14. 14. Thank you! Questions and comments? More information at http://enterpriseresearch.ac.uk/ Contact us about this research: Mark Hart mark.hart@aston.ac.uk This work reflects the joint effort by the research team of the ERC, including Michael Anyadike-Danes, Karen Bonner and Mark Hart. This work contains statistical data from ONS which is Crown Copyright. The use of these data does not imply the endorsement of the data owner or the UK Data Service at the UK Data Archive in relation to the interpretation or analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.

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