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Working Paper No. 1062

Are High-Growth Firms Overrepresented in High-Tech Industries?

Working Paper
Daunfeldt, Sven-Olov, Niklas Elert and Dan Johansson (2015). “Are High-Growth Firms Overrepresented in High-Tech Industries?”. IFN Working Paper No. 1062. Stockholm: Research Institute of Industrial Economics (IFN).

Sven-Olov Daunfeldt, Niklas Elert, Dan Johansson

It is frequently argued that policymakers should target high-tech firms, i.e., firms with high R&D intensity, because such firms are considered more innovative and therefore potential fast-growers. This argument relies on the assumption that the association among high-tech status, innovativeness and growth is actually positive. We examine this assumption by studying the industry distribution of high-growth firms (HGFs) across all 4-digit NACE industries, using data covering all limited liability firms in Sweden during the period 1997–2008.

The results of fractional logit regressions indicate that industries with high R&D intensity, ceteris paribus, can be expected to have a lower share of HGFs than can industries with lower R&D intensity. The findings cast doubt on the wisdom of targeting R&D industries or subsidizing R&D to promote firm growth. In contrast, we find that HGFs are overrepresented in knowledge-intensive service industries, i.e., service industries with a high share of human capital.