2. All grown up? The fate after 15 years
of the quarter of a million UK firms born in 1998
Michael Anyadike-Danes & Mark Hart
Aston Business School and Enterprise Research Centre
3. the agenda
the field
data sources and construction
getting to know cohort98
survival
birth to age 15 by size-band
growth trajectories and their slope
what have we learned?
4. the field: firm growth
from recent surveys of the firm growth literature:
Even though there has been sustained insterest in
growth for almost 50 years, relatively little is known
about this phenomenon and much misunderstanding and
confusion surrounds it. Leitch et al Entrepreneurship
Theory Practice, 2010
and,
We wrap up by .. arguing in favour of [a] ... research
strategy, which emphasizes the need for solid empirical
work to first produce the ’stylized facts’ that theory can
then attempt to explain. At this stage, we consider that
research into the growth of firms could benefit greatly
from gathering of statistical regularities and ’stylized
facts’. Coad, The Growth of Firms, 2009
5. data sources construction
1. sources
I Inter-Departmental Business Register
(IDBR) is a ’live’ register updated for jobs
from HMRC (VAT and PAYE) and Business Register
Employment Survey
I the BSD comprises extracts from ’snapshots’ of the IDBR
taken each March (1997 to 2013)
2. construction
I focus on firm and job dynamics with firms linked year-to-year
by ID
I appearance of first job birth of firm
I dis-appearance of last job death of firm
I private sector (defined by industrial activity)
I focus here: cohort of private sector firms born in 1998
7. cohort98, firms and jobs summary, birth to age 15
birth survivors age 15 summary statistics
at birth
firms ’000 239.6 26.2 26.2 survival ratio (%) 10.9
jobs ’000 1123.7 163.4 394.9 net job creation ’000 231.5
jobs/firm 4.69 6.25 15.09 growth ratio 2.41
Notes:
1. ’survival ratio’ is the ratio of firm numbers at age 15 to firm numbers
at birth
2. ’net job creation’ is the cohort jobs at age 15 less survivor jobs at birth
3. ’growth ratio’ is the ratio of jobs/firm at age 15 to jobs/firm in
survivors at birth
8. cohort98: jobs and firms, birth to age 15 (log scale)
(a) cohort98 jobs ('000), firms ('000) and jobs/firm (log scale)
year
jobs (th) and firms (th) and jobs/firm (log scale)
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1100
400
150
55
20
7.5
2.5
jobs
firms
jobs/firm
(b) cohort98 survivors jobs ('000) and jobs/firm (log scale)
jobs (th) and jobs/firm (log scale)
note: 26,162 firms survived to age 15
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1100
400
150
55
20
7.5
2.5
jobs
jobs/firm
9. cohort98:firm size distribution, birth and age 15,
shares by size-band,(%)
birth age15b age15t
shares by size−band %
0 20 40 60 80 100
from the bottom: 1–4; 5–9; 10-19; 20+
11. cohort98:hazard ratios by age and size-band
(a) hazard ratios by age, size at birth
0.35 1−4 5−9 10−19 20+
0.35 1−4 5−9 10−19 20+
years since birth
hazard, ratio
0.3
0.25
0.2
0.15
0.1
0.05
0
(b) hazard ratios by current size
0.3
0.25
hazard, ratio 1 2 3 4 5 6 7 8 9 10 12 14
years since birth
0.2
0.15
0.1
0.05
0
at age
hazard ratios
19. what have we learned?(1)
cohort98 was born with about 250 thousand firms and
1 million jobs, by age 15, 90% of firms were dead and jobs
down to 400 thousand
survival
I the chance of death fell from around 25% at age 2 to less than
10% at age 15
I firms larger at birth have a better chance of surviving
I by age 15 firms that grew out of the smallest size-band had
half the chance of dying compared to that of firms which did
not grow out of the smallest size-band
20. what have we learned?(2)
birth to age 15 by size-band
I 85% of age 15 survivors were born 1 – 4, by age 15 67% still 1
– 4
I just 1248 grow from 1 –4 to 20+ (6% of 1 –4), but these are
half of all 20+ at age 15
I 20+ at age 15 account for 85% of net job creation, and those
born 1–4 about half the 20+ contribution
I average jobs/firm expanded from 6 at birth to 15 by age 15, a
factor of 2.5
I growth in jobs/firm is inversely related to size-band at birth,
with those born 1 – 4 expanding at twice the average rate
21. what have we learned?(3)
growth trajectories and their slope
I trajectories connecting a size-band at birth to a size-band at
age 15 are generally monotonic but their slopes vary
considerably
I slopes of trajectory show most change up to age 5 – steepest
expansion/contraction
I size-bands shrinking to 1–4 seem to display ’quadratic’ slope:
is this how firms die?
I slopes of size-bands going to mid-size (5–9 and 10–19)
stabilise after age 5
I some evidence of ’disturbance’ around age 11–13 especially
firms heading to 20+ : 2009 – 2011 (’great recession’?)
22. The statistical data used here is from the Office of National
Statistics (ONS) and is Crown copyright and reproduced with the
permission of the controller of HMSO and Queen’s Printer for
Scotland.The use of the ONS statistical data in this work does not
imply the endorsement of the ONS in relation to the interpretation
or analysis of the statistical data.