High-growth firms: does location matter?

Abstract

The challenge for economies lies in boosting employment growth, not just by fostering entrepreneurship, but also by improving the growth potential of existing firms. Consequently, many studies have focused on assessing the dynamism of firms, and especially the capacity of high-growth firms (HGFs) to generate employment. This study aimed to identify HGFs in Spain during two periods, 2003–2006 and 2007–2010 and to analyse their characteristics and territorial distribution during the initial years of the economic crisis. Accordingly, a key area of inquiry of the study was the influence of agglomeration (in metropolitan areas, industrial districts and technological districts) on the locations of HGFs. To analyse the influence of location on the probability of firms being HGFs, a logit model was estimated. The main results supported the study’s hypotheses that technological districts and large urban areas are significantly associated with the probability of firms being HGFs, because firms profit from comparative locational advantages offered by these areas. The importance of HGFs requires special emphasis in relation to Spain’s context of economic crisis and high unemployment levels because of their significant contribution to employment generation.