Understanding Firm Growth
Helping SMEs Scale Up
Few small and medium-sized enterprises (SMEs) scale up, but these few fast growing firms are the major driver of new jobs added to OECD economies. This report helps policy makers get a grip on growth of those few SMEs by considering the transformation they undergo before, during and after their high-growth phase. Based on analysis of detailed firm-level data in a pilot project implemented for Finland, Italy, Portugal, the Slovak Republic and Spain, the report shows that SMEs in all types of places, of all ages and in all sectors have the potential to scale up. The strength of the potential does, however, vary. Getting a grip on growth of SMEs can pay important dividends as scalers contribute the majority of new jobs created by SMEs during their high-growth phase, but also continue to contribute positively to aggregate job creation and aggregate growth in turnover in the following years. A closer look at the characteristics of SMEs that scale up compared to similar “peers” that do not, shows that scaling is likely a strategic choice and includes investments and other preparatory transformation in the years preceding scaling up.
How do scalers contribute to economic growth?
This chapter provides new evidence on scalers’ growth dynamics for five OECD countries – Finland, Italy, Portugal, the Slovak Republic and Spain. The evidence is based on a pilot exercise using firm-level microdata and focuses on the scaling of small- and medium-sized enterprises (SMEs). The contribution of scalers to economic growth depends on the employment and value they create during their high‑growth phase and on their ability to sustain their new scale beyond that phase. The analysis confirms that the contribution of scalers is crucial for economic and employment growth, and provides new evidence on their ability to maintain the new scale and the role played by different types of scalers.
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