High-Growth Firms: Delineating Definitions, Industries, and Business Cycle Performance

There are strong reasons to believe that public policy affects the prevalence and success of entrepreneurial firms, and there is consensus in the literature that high-growth firms (HGFs), a specific subset of entrepreneurial firms that have a propensity to be employment generators in the economy, contribute significantly to employment growth (see, for example, Acs & Mueller, 2008; Acs, Parsons, & Tracy, 2008; Birch & Medoff, 1994; Choi, Robertson, & Rupasingha, 2013, Clayton, Sadeghi, Spletzer, & Talan, 2013; Kirchhoff, 1994; Mason & Brown, 2013; Stangler, 2010; Thurik, 2009). Moreover, authors have called for policy makers to provide HGFs with the resources they need in order to grow (Mason & Brown, 2013; Shane, 2009). However, due to the lack of agreement in the literature on how to identify and classify HGFs, no reliable mechanism or guidance is available to promote or detect HGFs (Coad, Daunfeldt, Hölzl, Johansson, & Nightingale, 2014). The confusion around defining HGFs provides an opportunity for comparative analysis in a time when public policy is looking to encourage HGFs. This study focuses on three major sets of questions about HGFs: 1) How are HGFs defined?; 2) Where are HGFs located—geographically, in terms of industrial sectors, and within business cycles?; and 3) How are HGFs connected to their regional entrepreneurial ecosystem? This study, with support from the Ewing Marion Kauffman Foundation, seeks to answer these questions through a tri-pronged approach. The research team conducted a literature review of HGF definitions, operationalized selected definitions into cohorts of companies, investigated these results, and disseminated and analyzed a survey of HGFs