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Determinants of High-Growth Firms and Related Dutch Policies

This paper explores the factors influencing high-growth firms and the policies implemented in the Netherlands. It examines the determinants of entrepreneurship, institutional obstacles, and opportunities for growth. The results highlight the importance of education, ambition, employment protection, administrative burden, and market enlargement. The Dutch policies, such as the Growth Accelerator program, aim to support the growth of innovative firms and fast growers. The results show positive outcomes in terms of turnover, employment, export, and R&D growth.

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Determinants of High-Growth Firms and Related Dutch Policies

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  1. Determinants of High-Growth Firms and Related Dutch Policies 1/15

  2. Overview • Paper: Why do some countries have more high-growth firms than others? • Possible implication to local determinants • Some examples of Dutch policies with respect to high-growth firms 2/15

  3. Paper on High-Growth Firms • Joint work with Mercedes Teruel (Universitat Rovira i Virgili) • Overview: • The paper in short • Motivation • Determinants that are investigated • Results • Policy implications 3/15

  4. The paper in short • Panel data set: 17 countries, 7 consecutive years • To be explained: percentage of high-growth firms • Explanatory variables concerning entrepreneurship, institutional settings, opportunities for growth • Simple OLS regression to sort out the most important determinants 4/15

  5. Motivation for paper • Interest of Dutch policy • Believed to be important for the economy • Contribute to dynamics of economy • Contribute to innovation and growth of labour productivity • Contribute to employment growth • Act as a role model for existing and nascent entrepreneurs • Percentage of high-growth firms in the Netherlands was lower compared to foreign countries • Attempt to explain differences between countries quantitatively with all information available • Unique data set on high-growth firms 5/15

  6. Variable to be explained:% high-growth firms • Average growth of 20% per year over the last three years • Growth in turnover • Size at the end 3-year growth period: 50 – 1000 employees 6/15

  7. Entrepreneurship variables • Tertiary education • Income motive • Desirable career choice 7/15

  8. Institutional obstacles • Employment protection • Start-up procedures 8/15

  9. Opportunities for growth • Population size • GDP growth • Technological development 9/15

  10. 10/15

  11. Policy implications • Stimulate enrolment in tertiary education • Stimulate ambition of entrepreneurs • Promote entrepreneurship as a desirable career choice • Lower the degree of employment protection • Lower the administrative burden for firms • Create common markets with other countries to enlarge the relevant market for firms => Implications for local policies ?! 11/15

  12. High-growth policies in the Netherlands • Various programs to stimulate growth • “Growth Accelerator”, aim: lead at least 100 firms to an annual turnover of 20 million a year in five years • “Fast Forward”, aim: facilitate 75 entrepreneurs that have growth ambitions with a 2-year program • “Red Carpet for Growth”, aim: stimulate growth of innovative firms and fast growers (300 startups and 150 fast-growing firms a year) • All programs are setup along approx. the same lines => We take “Growth Accelerator” as an example 12/15

  13. Selection of firms and finance • Selection criteria: • Gross turnover between 1 and 8 million a year • Business potential to grow to 20 million in 5 years • Ambition of entrepreneur • Entrepreneur will actively participate in program • Head office in the Netherlands => More than 100 firms are selected, they start in groups of approx. 20 • Finance: • Partly by government • Partly by firm itself: • 70 thousand for 5 years • ½ day a week during 5 years 13/15

  14. What is offered to the firms? • Tailor made business plan • Senior advise, growth support • Expert workshops • Unique network of growth entrepreneurs 14/15

  15. Results after the first year • Turnover growth: 22% more than control group • Employment growth: 8% more than control group • Export growth: 55% more than control group • Growth in R&D: 45% more than control group => Subscribers of the program were selected. Hence you cannot say that these results are due to the program! 15/15

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