Small Business Economics

, Volume 43, Issue 1, pp 183–195 | Cite as

What holds back high-growth firms? Evidence from UK SMEs

Article

Abstract

High-growth firms are seen as vital for economic growth. It is important for policy and theory to consider the barriers faced by firms achieving high growth and those with the potential to do so. This article uses data for 4,858 UK SMEs to investigate the obstacles perceived by two sets of firms: (1) firms in periods of high growth and (2) potential high-growth firms, which are observationally similar but are not achieving high growth. The results suggest high-growth firms perceive problems in six areas: recruitment, skill shortages, obtaining finance, cash flow, management skills and finding suitable premises. Potential high-growth firms feel held back by the economy, obtaining finance, cash flow and their management skills, but are less likely to perceive regulation is a problem. The results have implications for theory on high-growth firms and policies focussed at them.

Keywords

High-growth firms Barriers to growth Gazelles SMEs Entrepreneurship 

JEL Classifications

L0 D21 L2 L10 L26 

References

  1. Anyadike-Danes, M., Bonner, K., Hart, M., & Mason, C. (2009). Mapping firm growth in the UK: Identification of high growth firms and their economic impact. London: NESTA.Google Scholar
  2. Barker, K. (2006). The Barker review of land use planning. Final report—Recommendations. London: HMSO.Google Scholar
  3. Barringer, B. R., Jones, F. F., & Neubaum, D. O. (2005). A quantitative content analysis of the characteristics of rapid-growth firms and their founders. Journal of Business Venturing, 20, 663–687.CrossRefGoogle Scholar
  4. Becchetti, L., & Trovato, G. (2002). The determinants of growth for small and medium sized firms: The role of the availability of external finance. Small Business Economics, 19, 291–306.CrossRefGoogle Scholar
  5. Bennett, R. (2008). SME policy support in Britain since the 1990s: What have we learnt? Environment and Planning C: Government and Policy, 26(2), 375–397.CrossRefGoogle Scholar
  6. Bhide, A. (2003). The origin and evolution of new businesses. Oxford: OUP.Google Scholar
  7. BIS. (2008). High growth firms in the UK: Lessons from an analysis of comparative UK performance. London: BERR.Google Scholar
  8. Brush, C. G., Ceru, D. J., & Blackburn, R. (2009). Pathways to entrepreneurial growth: The influence of management, marketing and money. Business Horizons, 52, 481–491.CrossRefGoogle Scholar
  9. Bryson, A., Dorsett, R., & Purdon, S. (2002). The use of propensity score matching in the evaluation of active labour market policies. London: Department for Work and Pensions.Google Scholar
  10. Caliendo, M., & Kopeinig, S. (2008). Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys, 22(1), 31–72.CrossRefGoogle Scholar
  11. Cheshire, P., & Sheppard, S. (2002). The welfare economics of land use planning. Journal of Urban Economics, 52, 242–269.CrossRefGoogle Scholar
  12. Coad, A., Daunfelt, S., Johansson, D., & Wennberg, K. J. (2012). Who do high growth firms employ, and who do they hire? (Vol. 169). Ratio Institute Working Paper.Google Scholar
  13. Coad, A., & Rao, R. (2008). Innovation and firm growth in high-tech sectors: A quantile regression approach. Research Policy, 37(4), 633–648.CrossRefGoogle Scholar
  14. Coad, A., & Tamvada, J. P. (2012). Firm growth and barriers to growth among small firms in India. Small Business Economics, 39(2), 383–400.CrossRefGoogle Scholar
  15. D’Este, P., Iamarrino, S., Savona, M., & von Tunzelmann, N. (2012). What hampers innovation? Revealed barriers versus deterring barriers. Research Policy, 41(2), 482–488.Google Scholar
  16. Davis, A. (2011). Beyond the banks: Innovative ways to finance Britain’s small businesses. NESTA Research Summary.Google Scholar
  17. Delmar, F., Davidsson, P., & Gartner, W. (2003). Arriving at the high growth firm. Journal of Business Venturing 18(2), 189–216.Google Scholar
  18. Doerne, R., & Goss, D. (2013). From barriers to barring: Why emotion matters for entrepreneurial development. International Small Business Journal, 31(5), 496–519.CrossRefGoogle Scholar
  19. Eckhardt, J. T., & Shane, S. A. (2011). Industry changes in technology and complementary assets and the creation of high growth firms. Journal of Business Venturing, 26, 412–430.CrossRefGoogle Scholar
  20. Fischer, E., & Reuber, R. (2003). Support for rapid-growth firms: A comparison of the views of founders, government policymakers, and private sector resource providers. Journal of Small Business Management, 41(4), 346–365.CrossRefGoogle Scholar
  21. Hambrick, D. C., & Crozier, L. M. (1985). Stumblers and stars in the management of rapid growth. Journal of Business Venturing, 1(1), 31–45.Google Scholar
  22. Henrekson, M., & Johansson, D. (2010). Gazelles as job creators: A survey and interpretation of the evidence. Small Business Economics, 35(2), 227–244.CrossRefGoogle Scholar
  23. Henrekson, M., Johansson, D., & Stenkula, M. (2010). Taxation, labour market policy and high-impact entrepreneurship. Journal of International Competition and Trade, 10(3–4), 275–296.CrossRefGoogle Scholar
  24. Hölzl, W., & Janger, J. (2013). Does the analysis of innovation barriers perceived by high growth firms provide information on innovation policy priorities? Technological Forecasting and Social Change,. doi:10.1016/j.techfore.2013.05.010.Google Scholar
  25. Hutton, W., & Nightingale, P. (2011). The discouraged economy. London: The Work Foundation.Google Scholar
  26. Kitching, J. (2006). A burden on business? Reviewing the evidence base on regulation and small-business performance. Environment and Planning C: Government and Policy, 24, 799–814.CrossRefGoogle Scholar
  27. Lee, N., & Cowling, M. (2012). Place, sorting effects and barriers to enterprise in deprived areas: Different problems or different firms? International Small Business Journal,. doi:10.1177/0266242611435516.Google Scholar
  28. Levy, C., Lee, N., & Peate, A. (2011). Ready, steady, grow? How the government can support the development of more high growth firms. London: The Work Foundation.Google Scholar
  29. Lopez-Garcia, P., & Puente, S. (2012). What make a high-growth firm? A dynamic probit analysis using Spanish firm-level data. Small Business Economics, 39(4), 1029–1041.CrossRefGoogle Scholar
  30. Mason, G., Bishop, K., & Robinson, C. (2010). Business growth and innovation: The wider impact of rapidly growing firms in UK city-regions. London: NESTA.Google Scholar
  31. Mason, C., & Brown, R. (2013). Creating good public policy to support high-growth firms. Small Business Economics, 40(2), 211–225.Google Scholar
  32. Michaelas, N., Chittenden, F., & Poutziouris, P. (1999). Financial policy and capital structure choice in UK SMEs: Empirical evidence from company panel data. Small Business Economics, 12(2), 113–130.CrossRefGoogle Scholar
  33. Mole, K. F., Hart, M., Roper, S., & Saal, D. S. (2011). Broader or Deeper? Exploring the most effective intervention profile for public small business support. Environment & Planning A, 43, 87–105.Google Scholar
  34. NESTA. (2009). The vital six percent. London: NESTA.Google Scholar
  35. NESTA. (2011). Vital growth. London: NESTA.Google Scholar
  36. OECD. (2010). High-growth enterprises: What governments can do to make a difference?. Paris: OECD.CrossRefGoogle Scholar
  37. Parker, S., Storey, D. J., & van Witteloostuijn, A. (2010). What happens to gazelles? The importance of dynamic management strategy. Small Business Economics, 35, 203–226.CrossRefGoogle Scholar
  38. Penrose, E. (1959). The theory of the growth of the firm. Oxford: Blackwell.Google Scholar
  39. Rigby, J., Bleda, M., Morrison, K., & Kim, J.-S. (2007). Mini-study 1: Gazelles. PROINNO EUROPE.Google Scholar
  40. Sadiq, K., Shapira, P., & Roy, A. (2011). Stimulating business innovation: Making Manchester a leader in enterprise support. Manchester New Economy Working Papers (NEWP 007).Google Scholar
  41. Smallbone, D., Baldock, R., & Burgess, S. (2002). Targeted support for high growth start-ups: Some policy issues. Environment and Planning C: Government and Policy, 20, 195–209.CrossRefGoogle Scholar
  42. Storey, D. (1994). Understanding the small business sector. London: Thomson.Google Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of Geography and EnvironmentLondon School of EconomicsLondonUK

Personalised recommendations