Presentation by Mark Hart to the ERC State of Small Business Britain conference 2016

1. Professor Mark Hart
ERC

2. Dashboard – Focus on Geography of
Growing Firms
• Video highlighted the wide range of variations in the well-known OECD
High-Growth Firm (HGF)
• However, while useful it is restrictive – need to understand the various
types of firms that are growing and where they are concentrated
• Greater granularity in growth metrics better informs the development
of local and regional economic policy

3. Firm Survival and Growth
3
Start-ups achieving
at least £1m T/O
after 3 years
Established
businesses growing
from £1-2m to
£3m+ T/O

4. Fast-Growing Firms (2012-15)
• Fast-Growth is defined as annualised average growth in
employment of 20% or more over a three year period.
• Overall, Scotland, Wales and the southern and western parts
of Northern Ireland perform well with above average
proportions of these businesses.
• In England, London has the highest proportions of fast-
growing businesses but all the other local areas with above
average proportions of fast-growing businesses are in the
North, South West and the Midlands.
• The data shows quite clearly that some of the fastest
growing businesses in the UK are delivering jobs and
revenues for their owners outside London and the South
East which has been a consistent finding since we started
tracking this metric by local areas in the UK.

5. Driving Business Support Interventions
• Does confirm the value of locally differentiated policies reflecting the
local realities of business dynamics
• Something long recognised in Scotland, Wales and Northern Ireland but
constantly being re-worked in England!

6. A Simple Story of Productivity! – 2008-15
Turnover Growth
Job
Growth
Zero
Zero
‘Green Zone’
+
+
+
-
-
-
Only one ‘space’ where growth
in T/O; Jobs and productivity
are all +ve – the ‘green zone’
But sparsely populated with
firms – approx. 10%
…and more than half of them
where there is very little
growth – the blue triangle
Rule of thumb – 3 out of 4
firms which grow turnover
grow productivity; 1 in 5 firms
which grow jobs grow
productivity

7. Productivity and High-Growth Firms?
• Only 20% of 10+ employee firms in the ‘green zone’ are HGFs (T/O
definition)
• Only 5% of 10+ employee firms in the ‘green zone’ are HGFs (Jobs
definition)
• So from a productivity perspective HGFs are not an important group of
firms – main problem here is both a definitional one and the focus on
jobs!

8. Creating a Growth Pipeline
• A single-minded preoccupation with HGFs may not be a sensible focus
for policy-makers - not only is it somewhat arbitrarily defined, it has the
disadvantage of rendering invisible the reality of growth for the majority
of businesses
• And now we know they are less important for productivity growth than
one might have imagined!
• It would be more informative to concentrate on the importance of
creating a growth pipeline at local level and monitoring its development
over time.

9. A Fresh Look at the SME Population
• Build a growth pipeline around the following:
– Potential and Nascent Entrepreneurs
– Lone Rangers and the unwilling self-employed
– Steady Eddies – limited entrepreneurial intensity and low risk tolerance
– Rising Stars – strong growth ambition but in need of leadership skills to
implement innovation and internationalisation and engage in external networks
– Leading Lights – established firms with sustained growth ambition based on core
management competencies

10. Thank you!
Questions and comments?
More information at http://enterpriseresearch.ac.uk/
Contact us about this research: Mark Hart mark.hart@aston.ac.uk
This work reflects the joint effort by the research team of the ERC, including
Michael Anyadike-Danes, Karen Bonner and Mark Hart.
This work contains statistical data from ONS which is Crown Copyright. The use of these data does not imply the
endorsement of the data owner or the UK Data Service at the UK Data Archive in relation to the interpretation or
analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.