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Regional incidence and persistence of high-growth firms: Testing ideas from the Entrepreneurial Ecosystems literature

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Abstract
Policy-makers and scholars often assume that a higher incidence of high-growth firms (HGFs) is synonymous with vibrant regional economic dynamics, and that HGF shares are persistent over time as Entrepreneurial Ecosystems (EEs) have slowly-changing features. In this paper we test these hypotheses, which are deeply rooted in the EE literature. We draw upon Eurostat data for up to 20 countries over the period 2008-2020 and study HGF shares in NUTS-3 regions in Europe. Analysis of regional rankings yields the puzzling finding that the leading EEs in Europe, apparently, are in places such as southern Spain and southern Italy. These places would not normally be considered Europe’s foremost entrepreneurial hotspots. Additional results do not provide strong support for the hypothesis that more developed regions feature higher HGF shares. We do find evidence consistent with HGF shares displaying persistency over time. However, we show that more developed regions do not have higher persistence in their HGF shares, and that the strength in persistence does not increase across the HGFs distribution, which does not support path-dependency as the main mechanism behind the observed persistence. Overall, we call for a more nuanced interpretation of both regional HGF shares and the EEs literature.

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  • Alex Coad & Clemens Domnick & Pietro Santoleri & Stjepan Srhoj, 2023. "Regional incidence and persistence of high-growth firms: Testing ideas from the Entrepreneurial Ecosystems literature," JRC Working Papers on Corporate R&D and Innovation 2023-02, Joint Research Centre.
    • Handle: RePEc:ipt:wpaper:202302
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC134469
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    Keywords

    Entrepreneurial Ecosystems; High-Growth Firms; Persistence; Firm Growth; Entrepreneurship Policy; Regional Policy;
    All these keywords.

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