Nesta Working Paper 12/13

Issued: December 2012
JEL Classification: J24; O31; O41; O47
Keywords: Technology-based firms; Survival; Growth; High growth firms

Abstract

Despite the importance of high technology firms to the UK's economy, relatively little is known about factors contributing to these firms' long-run growth and survival. We examine these factors using a unique longitudinal dataset combining two waves of detailed surveys of 345 UK high tech firms and performance and survival data. We use a series of OLS, logit and multinomial logit models to explore factors contributing to the performance and survival of these firms. Our results show that long-term survival rates are near two thirds for the firms in our sample, and that performance within the sample is skewed by a limited number of high performing firms.

We find that 40% of firms reported difficulty in finding skilled workers, and find that lack of access to skills results in lower long-run growth for these firms. We find that two-thirds of technology firms target overseas markets from birth, and the entry into overseas markets is important for survival and growth. Overall we conclude that the early strategic decisions made by firms have long-run impacts on their survival and growth, and we suggest that policy measures targeted at the shortfalls faced by these firms may have positive long-term consequences.

Authors

Josh Siepel, Marc Cowling, Alex Coad

The Nesta Working Paper Series is intended to make available early results of research undertaken or supported by Nesta and its partners in order to elicit comments and suggestions for revisions and to encourage discussion and further debate prior to publication (ISSN 2050-9820). The views expressed in this working paper are those of the author(s) and do not necessarily represent those of Nesta.