Why we did this

Innovation policy often focuses on small or young firms as the key to innovation. In fact, a better focus would be high-growth firms, which occur in all sectors and at all sizes. Our ground-breaking report, The vital 6% demonstrated that a small number of these high growth companies contribute half of employment growth.

Many government policies aim to support growth and innovation in the economy. By better understanding the small proportion of firms that can make a big difference, we hope to better inform policies in this area.

What we did

We funded a wide range of academic research to better understand high-growth firms and the contributions they make to innovation, economic growth and productivity.
We also built a unique database of the dynamics of business growth, using business register data from 12 countries, identifying significant differences across countries and documenting their impact on productivity growth.

The programme studied in much detail the characteristics of UK high growth firms and what drives their performance, in particular the role of innovation.

Findings

We found a small number of high growth companies contribute half of employment growth and also showed that innovative firms grow twice as fast in both employment and turnover.

The background

This series of research reports over four years sought to quantify and characterise the distribution of business growth across countries, with a particular focus on the impact of UK high-growth firms on innovation and the wider economy.

These firms are also referred to as ‘gazelles’. For many, though not all, our reports, we used the OECD definition of high-growth, which is a firm of 10 or more employees that grows either its staff or turnover by an average of more than 20 per cent per year for three consecutive years.