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Knowledge spillovers and high-impact growth: Comparing local and foreign firms in the UK

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Abstract

This paper is concerned with entrepreneurial high-impact firms, which are firms that generate ‘both’ disproportionate levels of employment and sales growth, and have high levels of innovative activity. It investigates differences in the influence of knowledge spillovers on high-impact growth between foreign and local firms in the UK. The study is based on an analysis of data from UK Innovation Scoreboard on 865 firms, which were divided into ‘high-impact firms’ (defined as those achieving positive growth in both sales and employment) and low-impact firms (negative or no growth in sales or employment). More precisely, the paper investigates the influence of knowledge spillovers on high-impact growth of foreign and local firms, from regional, sectoral and firm size perspectives. The findings suggest that (1) firms’ access to regional knowledge spillovers (from businesses and higher education institutions) is more significantly associated with high-impact growth of local firms in comparison to foreign firms; (2) because knowledge spillovers are more likely to occur in high-tech sectors (compared to low-tech sectors), firms in high-tech sectors are more associated with high-impact growth. Nonetheless, the relationship is stronger for local firms compared to foreign firms; (3) because small firms have greater need for knowledge spillovers (relative to large firms), there is a negative relationship between firm size and high-impact growth, but the negative relationship is greater for UK firms in comparison to foreign firms. Implications are drawn for policy and research.

Abstrait

Ce document porte sur les sociétés entrepreneuriales à impact élevé, qui sont des sociétés qui génèrent des niveaux disproportionnés de croissance d’emploi ‘aussi bien’ que de ventes, et qui démontrent une haute performance innovante. Il examine les différences de l’influence de la diffusion de connaissances sur une croissance à impact élevé entre des sociétés étrangères et locales dans le Royaume-Uni (UK). L’étude se base sur une analyse de données du Tableau de bord de l’innovation du Royaume-Uni de 865 sociétés qui ont été divisées en ‘sociétés à impact élevé’ (définies comme celles réalisant une croissance positive des ventes et de l’emploi) et sociétés à impact réduit (taux de croissance des ventes et de l’emploi nul ou négatif). Plus précisément, ce document examine l’influence de la diffusion de connaissances sur la croissance élevée de sociétés étrangères et locales, d’un point de vue régional, sectoriel et en relation avec la taille des sociétés. La conclusion suggère que: 1) l’accès des sociétés à la diffusion régionale de connaissances (provenant d’institutions commerciales et d’enseignement supérieur) est. fortement lié à une croissance élevée de sociétés locales par rapport aux sociétés étrangères ; 2) car la diffusion de connaissances survient plus fréquemment dans les secteurs de haute technologie (par rapport aux secteurs de basse technologie), les sociétés appartenant à des secteurs de haute technologie sont davantage liées à une croissance élevée. Néanmoins, la relation est. plus forte chez les sociétés locales par rapport aux sociétés étrangères; 3) car les petites entreprises ont un plus grand besoin de diffusion de connaissance (par rapport aux grandes entreprises), il existe une relation négative entre la taille de l’entreprise et la croissance élevée chez les sociétés du Royaume-Uni par rapport aux sociétés étrangères. Les conséquences pour la politique et la recherche sont tirées.

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Notes

  1. Organization for Economic Cooperation and Development (OECD).

  2. European Union.

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Acknowledgments

We are grateful for the constructive comments and feedback received from two anonymous reviewers. The comments are gratefully acknowledged.

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  1. Kingston Business School, Kingston University London, Kingston Hill campus, Kingston Hill, Kingston upon Thames, Surrey, KT2 7LB, UK

    Yazid Abdullahi Abubakar

  2. Essex Business School, University of Essex, Wivenhoe Park, Colchester, CO4 3SQ, UK

    Jay Mitra

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Abubakar, Y.A., Mitra, J. Knowledge spillovers and high-impact growth: Comparing local and foreign firms in the UK. J Int Entrep 15, 145–176 (2017). https://doi.org/10.1007/s10843-016-0195-7

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