Understanding Firm Growth

Helping SMEs Scale Up

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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 transform as they grow?

The chapter presents new evidence on the transformation process that distinguishes small- and medium-sized enterprises (SMEs) that scale up from comparable firms that do not scale. The analysis builds on detailed information on individual firms in up to four OECD countries. The chapter presents different transformation models that underpin scaling up and describes the transformation of scalers based on dynamic characteristics such as their innovative activity, integration into global markets, digitalisation or workforce characteristics.


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