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2. Table of Contents Introduction: .................................................................................................................................... 5 1.1 Introduction to the study: ...................................................................................................... 5 1.2 Description of research report ............................................................................................... 5 1.3 Background high impact firms: ............................................................................................ 6 1.4 Research Objective: .............................................................................................................. 6 1.5 Research question: ................................................................................................................ 7 1.6 Scope of the study: ................................................................................................................ 7 1.7 Significance of the study:...................................................................................................... 8 1.8 Implications for the industry: ................................................................................................ 8 1.9 Conclusion: ........................................................................................................................... 8 2.0. Literature review: ..................................................................................................................... 9 2.1. Defining High impact firms: ................................................................................................ 9 2.2. Factors influencing emergence of high growth firms: ....................................................... 10 2.2.1 Micro-level factors ..................................................................................................................... 10 2.2.2. Macro level factors: .................................................................................................................. 11 2.3 Patterns of growth in high impact firms: ............................................................................ 12 2.4 Effect of the Environment on high impact firms: .............................................................. 13 2.5 Barriers to growth of high impact firms: ............................................................................ 13 2.6 Competitive strategy in high impact firm growth: .............................................................. 14 2.7 Heterogeneity and high impact firms:................................................................................. 14 © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 2 of 49

3. 2.7.1 Heterogeneity in firm growth measures: ................................................................................... 15 2.7.2 Heterogeneity in the appropriateness of specific firm growth indicators: ............................... 15 2.8 High growth firms and employment growth:...................................................................... 16 2.9 HGF and economic growth: ................................................................................................ 16 2.10 Competence blocks in HGFs: ........................................................................................... 17 2.11 Innovation and growth of High impact firms: .................................................................. 19 2.12 Conclusion: ....................................................................................................................... 20 3.0: Methodology .......................................................................................................................... 21 3.0. Introduction ....................................................................................................................... 21 3.1. Research Question ............................................................................................................. 21 3.2. Hypothesis.......................................................................................................................... 21 3.3 Research Design: ................................................................................................................ 21 3.4. Research population: .......................................................................................................... 22 3.5. Research Methodology: ..................................................................................................... 22 3.5.1. The Deductive versus the Inductive Approach: ........................................................................ 23 3.5.2. The Qualitative versus the Quantitative Approach: ................................................................. 24 3.6. Data Collection .................................................................................................................. 24 3.6.1. Quantitative approach through statistical databases: ............................................................. 25 3.6.2. Qualitative analysis: .................................................................................................................. 25 3.7. Ethical Consideration: ........................................................................................................ 26 3.8 Conclusion: ......................................................................................................................... 26 4.0. Findings and Analysis: ........................................................................................................... 28 4.1. Introduction: ....................................................................................................................... 28 4.2. High impact firms in UK: .................................................................................................. 28 4.2.1 Financial source: ........................................................................................................................ 28 4.2.2 Location: ..................................................................................................................................... 29 4.2.3. Sectoral composition: ............................................................................................................... 31 © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 3 of 49

4. 4.2.4. Creation of employment: .......................................................................................................... 32 4.2.5. Summary of quantitative analysis and implications for the qualitative analysis:..................... 33 4.3. Policies and regulatory framework: ................................................................................... 34 4.3.1. Need for policy intervention: .................................................................................................... 34 4.3.2. Polices implemented by the UK government: .......................................................................... 34 4.3.3. Macro and micro economic policies: ........................................................................................ 35 4.3.4. Regulatory framework as a driver for high growth firms: ........................................................ 36 4.3.5. Proposed implications for policymakers to foster growth of high impact firms: ..................... 38 4.4. Conclusion: ........................................................................................................................ 39 5.0. Summary and Recommendations: ......................................................................................... 40 5.1. Introduction: ....................................................................................................................... 40 5.2. Summary: ........................................................................................................................... 40 5.3. Limitations of the study and reflective criticism: .............................................................. 41 5.4. Recommendations for further study: ................................................................................. 41  An analysis of the determinants of the prevalence of Start-ups which influence fostering of High-Growth Firms .............................................................................................................. 42 5.5. Conclusion: ........................................................................................................................ 42 References: ................................................................................................................................ 43 © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 4 of 49

5. 1.0 Introduction: 1.1 Introduction to the study: Economic development can be described as a desired characteristic by all countries but very few actually achieve it. It is a complex process involving many dimensions, each of these diverse facts with varying scopes. It is important for the country governments to understand the different variables involved in controlling of the various sectors of the economy, their contributions as well as their characteristics. One of the important and under studied category is the high impact firms. There has been a lot of debate about the definition of a high impact firm, it has been observed very clearly by a number of authors that their importance to the growth of the economy is very high. Thriving businesses are very important for the development of an economy and also the recovery of the economy of the country after a period of recession. Productivity growth can be decomposed between the effects of the reallocation of resources within firms which often happens as a result of the existing conditions of internal reorganization and between different firms which often occurs as a result of existing conditions of entry, exist, mergers and acquisitions (NESTA 2009a). This process of restructuring is inhibited if the growth of highly impact firms is constrained. This in turn results in a condition where they fail to replace low-productivity firms. There is therefore a keen interest in learning more about the policy and institutional settings which help create the most favourable conditions for firms to prosper and grow. It is seen that businesspeople, investors and policymakers over the years have created jobs, wealth and wider prosperity. There is a necessity of the government to create the right conditions for businesses to grow. Therefore it is very important to understand how the growth can be the achieved as well as understand the factors required to understand it. This dissertation examines growth of high growth firms primarily in the cities of the United Kingdom. During the course of the investigation it also helps in the consideration of the wider benefits of growth businesses and the relationship between growth and innovation. The importance of innovation to business growth is acknowledged. The considerable socio economic benefits of high growth businesses along with the different policies implemented are also studied. All this leads to the development of ways to foster high growth firms. 1.2 Description of research report: The present research report is organized in to five major chapters. In Chapter one the concise background of the analytical problem and background on high growth firms. There is also a discussion of the scope of the study as well as industry implications. In addition, the chapter also sets the aims and objectives, outlines the research question which is discussed through the course of the dissertation presentation. The chapter two reviews the literatures on the different aspects of high growth firms. It provides an analysis of the heterogeneity of the existing firms, the highlighting characteristics of these firms, the competencies and barriers for growth of the firms. The chapter also rationalizes the need of the hour for establishing more high growth firms in the country in order to promote the economic development of the nation. In chapter three the research methodology is discussed. This includes the research study design, data collection techniques, research hypothesis and validation of the research design chosen. Chapter four of the report focuses on data analysis. In this report there is a discussion of findings which can be broadly brought under two different sections. The overview of the existing high growth firms in © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 5 of 49

6. UK and their structural aspects is discussed. Secondly there is a concentration on the different policies as well as reviews which can be made in order to foster high impact firms. There is a scrutiny of a number of recent reports on high growth firm behavior and their characteristic features. Chapter five of the report is the final chapter and it gives the executive summary of the study, implications and further recommendation for future study. Chapter six of the report contains the bibliography section that is used in the study. 1.3 Background high impact firms: High impact firms (HIF) can be defined as those firms whose sales have at least doubled over a four period. (Acs, Parsons and Tracy, 2008). OECD defines, namely that a firm with employment or turnover growth of greater than 20% per year over a 3 year period is considered to be high growth.(OECD 2007). The High growth firms are firms which are in found in all sectors of economy for ex, primary, secondary and tertiary and they are not only subjected to high technology sectors. Successful innovation enables high growth firms to outperform others, so innovative firms grow twice as fast as firms which don’t innovative. (NESTA October 2009). Most of the HIF are relatively old, few in number and contribute the majority of overall economic growth. The existing of the industries is in almost all regions, states, Metropolitan statistical areas and counties, which account for almost all employment and revenue growth in the economy. It takes a company around 20 to 25 years to enter high impact stage or they are as old as 25 years but they are younger compared to low impact firm. They exist for around this period of time before they impact the economy. The job creation by high impact firms was 58% in 12 years in small firms. When they are classified as high impact firms initially only 3% die most of them continue and grow to a certain extent. After a HIF undergoes its high growth phase around 75% of these firms fail to sustain their high impact status. These firms account for almost all private sector employment and economic growth in the economy but they only represent 3% of all firms. The data provided by as per SBA office of advocacy 2009 suggest that local economic development Officials would benefit from recognizing the value of cultivating high- growth firms versus trying to increase entrepreneurship overall or trying to attract relocating companies when utilizing their resources (Harpst G 2009 and SBA- High Impact Firms: Gazelles Revisited 2008). 1.4 Research Objective: Government has taken many efforts in the past to benefit enterprises. However despite these efforts there appear to be a number of barriers in the business as well as the regulatory environment towards fostering of high impact firms. This research analyses the factors which influence the growth of a high growth firm along with the different policy measures being promoted by government as well as a regulatory framework required to foster the growth of more high impact firms. This report aims to add to the piling evidence base by identifying common characteristics of high impact firms and ensuring that the framework established could give rise to a business environment which promotes the growth of high impact firms. The main aims and objectives of this research report are as follows: To study how high impact firms are more efficient than low impact firms. To critically evaluate and analyze the literature available on high impact firms. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 6 of 49

7. To determine the relation between high impact firms and economic development during all stages of an economy. To study the effect of recession on high impact firms. To focus on employment change, innovation and productivity 1.5 Research question: There seems to be a consensus with regard to the magnitude of high impact firms in the UK national economy. There is an existing debate about the efforts as well as effectiveness of the different policies put forth by the directive bodies in the UK concerning high impact firms. This is very clear in the number of comments made by academics with reference to the comparative performance of the UK firms with the rest of the worlds. This research is intended towards bridging this over growing gap. What are the different measures that can be adopted in order to promote measures to foster high impact firms? The answers to this questions helps in bringing about an explanation to this ongoing debate and help in the provision of a firmer basis for judgment as well as decision making. Table 1: Morphological analysis Topic Aim High impact firms Identification of measures to foster growth of high impact firms Adapted from Fisher, 2007 Therefore the hypothesis to be tested involves two components A study of the existing structural behavior of the high impact firms in the UK is important to arrive at measures to promote fostering of high impact firms. Policies need to be directed at high impact firms to facilitate fostering of high impact firms. 1.6 Scope of the study: Design Reports, Journals and academic papers. Focus Single firm category: High Impact Given the effective nature of high impact firms, it is important that better measures of undertaking policies to foster the growth of high growth firms is important. There is a perception in the economic world that the UK and Europe are failing to create innovative new firms that growth rapidly into world leaders. There is a persistent belief that the UK government is taking enough measures to ensure sustainable development of high growth firms. For economists capital gaps occur when worthy business opportunities go unfunded even though capital is available in the economy overall. With such claims attached to high impact firms, it is become more binding for the government to act positively (Buss 2008). When faced with increased global competitiveness and economic uncertainty it becomes important to focus on developing better measures of managing businesses. There is a need to create more new business opportunities as well as accelerate © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 7 of 49

8. the current existing business development projects. It is becoming increasingly important to concentrate on small and midsized companies. It has been well documented that it is in these organizations that the drivers of our local economies which are responsible for the overwhelming majority of economic and employment are located (Harpst 2008). It has been established that UK’s long-term economic growth is underpinned by the vitality of its businesses. In order to guarantee future economic performance of the country it is important that a dynamic business sector is developed. This sector involves a situation where new firms continuously enter the market, grow in size and displace weak firms. It is therefore important the government encourage entrepreneurship and provides a range of help for small and medium-sized enterprises (SMEs). These should include grants for business investment and research and development. \ Despite the growing interest in fast-growing firms very little is currently known about how businesses grow in the United Kingdom and what their impact on the economic performance of the nation.This report looks at measures for fostering high growth firms by looking at policies of the government as well the existing structural behavior of high growth firm involving measures to promote advice and co-funding for development of export capability, small loan guarantees and venture capital schemes. 1.7 Significance of the study: High impact firms are called so due to their significant contribution to the economy they exist in. It has been well established that they generate a very high percentage of jobs created in the UK economy (Hoffman and Junge 2006). It has been shown by extensive research that high growth firms which usually form about 3-4% of all firms in the economy generate more than half of the new jobs in the United Kingdom (Storey 1994). Given the high correlation between high impact firms as well as the economic activity of the country there is a need for suitable reforms and policies which can help promote the growth of high impact firms. This research report is intended towards achieving this goal. 1.8 Implications for the industry: High growth firms generate benefits for the whole economy which extend more widely than the profits realized by the entrepreuner and investors (BERR 2008). These benefits can be enhanced by the analysis of the structural behavior of the existing HGFs in UK and promoting policies by regulatory bodies to ensure that these firms are fostered in a better manger. The implications of the findings will lay out a blue print for the subsequent action to be taken by the regulators so as to maintain growth in the existing firms and also facilitate entry of more number of high impact firms. This research report is aimed at providing measures to bridge the gap in the percentage of high growth firms between UK and the US as denoted by Hoffman and Junge 2006. 1.9 Conclusion: As explained in this chapter, the study shall focus on the key determinants of methods to develop and foster high impact firms. The next chapter presents the literature reviewed for this study. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 8 of 49

9. 2.0. Literature review: The main aim of this literature review is to obtain recently updated data with regard to high growth firms in order to develop a holistic approach to the chosen area of research and highlight the overall importance of high growth firms in the U.K. economy. This section reviews literature published by accomplished authors who have researched the behavior of firm categories with similar features. The research concentrates on defining high impact firms, Characteristics and growth patterns of these firms and describing the different heterogeneity measures which have role to play in fostering existing high growth firms and attracting the growth of newer firms. The literature review has been organized into numerous subsections each detailing the different ways in which they influence the fostering of high growth firms. The scope of literature in the area of high impact firms is broad. It contains more fields than that can be managed in this literature of review. Hence this chapter concentrates on the different factors which influence the fostering of high impact firms. Notice is given to those sections which highlight the characteristics of high impact firms which in turn influence their economic contribution. Factors influencing the creation and sustenance of firms have also been highlighted. 2.1. Defining High impact firms: High impact firms can be described quite easily. These are firms which can be considered as those which grow at a rate much higher than other firms. This rate of growth is very prominent and contributes to the economy of the country. High-growth firms have attracted considerable attention from the industrial sector. These firms today are considered to be exceptional and some authors consider these firms as being solely responsible for driving economic growth through extreme rates of growth. These growth rates include employment, sales, profits and engagement in innovative behavior (NESTA 2009b). The term high impact firms has been used interchangeably with other terms like “high growth” and “Gazelles”. It has been accepted by numerous authors that these “terms” are almost similar and can be used alternatively (NESTA 2009b). NESTA (2009b) report has indicated that recently conducted 19 different studies have noted that there is no general agreement on the definition of high-growth firms and gazelles (Henrikson and Johannsen 2008). Definitions have always varied based on a number of factors which include: 1.Choice of growth indicator: These indicators include parameters like employment, sales or profits. 2.Measurement of the growth achieved 3.The time period over which this growth is measured 4.The method in which this growth was achieved. Issues like whether the growth is through acquisitions or is it through organic methods. Leibenstein (1968) has indicated that high impact firms are those which help in improving and innovating new processes or products. These processes and products are then brought into the market in order to create new business opportunities. This definition has not covered any of the factors indicated previously in the NESTA report hence cannot be used. Birch (1981) used revenue growth as a factor to define high impact firms. This model was developed to promote the value of the monetary benefits to prospective clients who would invest in the newly © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 9 of 49

10. developed innovative products. A main constraint of this model is that though it considers a growth factor a time period or the method of growth was not taken into consideration at all. BERR(2008) report has used the term high impact firm very loosely. They have denoted that all firms which sustain levels of growth in turnover or in employee numbers can be considered as firms which have a high growth when compared to the majority of the business. This definition is again vague and does not cover all the criteria. OECD (2007) has proposed the following definition for a high growth firm: “A high-growth firm is defined as a firm with an average employment growth rate exceeding 20 per cent per annum over a three-year period and with ten or more employees at the start of the period” Looking deeper into the definition by OECD one can note that this definition has supported all the criteria proposed by NESTA (2009). It has covered the internal growth factor in terms of turnover in terms of employee numbers. It has also included a time factor indicating that there should be 20% growth over a period of three years. This looks at the consistency of the company. The contribution made to the economy in terms of employment as well as productivity is clear and concise. These aspects indicate that this definition is the best suited for this research. 2.2. Factors influencing emergence of high growth firms: Delmar (1997) has showed that there is little agreement on what type of factors affect growth or on how this growth is best measured. It was indicated that the choice of absolute versus relative growth criteria has a substantial impact on the results when applied to high growth firms. Some factors which positively affected absolute growth were unrelated to growth in relative terms. The same pattern was also discovered when growth in sales as well as growth in numbers of employees were determined. The factors affecting sales were found to be quite different from those which affect the number of employees. Most of the studies in this section were found to be cross-sectional and relied on relatively small samples. These limitations of the data thus lead to fractional insights into the reality of high-growth firms and it was discovered by Murphy, Trailer & Hill (1996) that the different measures of performance should include both macro level as well as micro level factors to establish a consensus on absolute and relative growth. 2.2.1 Micro-level factors A review of the different micro level factors which influence the birth of high growth firms is very important to this study. These factors help understand the importance of fostering high growth firms. Entrepreneurship and innovation has been promoted as an important factor which helps in the growth of firms by NESTA (2009a) report. This section of the review of literature looks at the different micro level factors which influence the emergence of high growth firms. Productive entrepreneurship is an essential explanatory factor which influences the economic performance of a company. There are a number of reasons to believe in this factor which leads to a number of cross country differences in the degree of productivity which is enhanced when there is entrepreneurial activity. There are a number of other reasons which guide this type of difference in economic performance (Flamholtz,1996). The concrete manifestation of this type of vibrant entrepreneurial culture can give rise to the following observation: © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 10 of 49

11. 1.The high prevalence of new entrepreneurs has led to a substantial increase in the rate of firm formation. 2.The availability of a number of commercial ideas can be understood and translated into a good sized number of high growth firms. A number of empirical research which has aimed at the identification of the different micro level factors which have influenced the emergence and high growth of firms. A number of different psychological as well as socio demographic factors have been identified by a number of authors and they have all arrived at different conclusions (Ardishivili, 1998). There has been identification of thirty five different factors, classified under three different categories namely (Flamholtz,1996): 1.The availability of starting resources for any entrepreneur. This includes factors like motivation as well as education 2.The different characteristics of the firm. This includes factors like size of the firm and age. 3.The different strategies which are developed and implemented by the firm. This includes management training as well as market positioning. It has also been identified by Barringer et al., (2005) that there are four very important categories of variables which influence rapid firm growth. These include founder characteristics, firm attributes, business practices as well as human resource management. 2.2.2. Macro level factors: Macro-level factors which influence high growth firms include study of the effects of public policy, like tax policy and financial assistance, aimed at stimulating the growth of small and medium sized firms (Storey 1994; Storey 2006). The effects of institutions on firm growth in a broader sense encompasses the different business climate has been studied by Demirgüç-Kunt and Maksimovic (1998) and his literature specifically addressing the effects of public information on high growth firms which indicates is scarce. Davidsson and Henrekson (2002) have analyzed the effects of institutions on the incentives for entrepreneurs to establish and rapidly expand enterprises. Stam et al. (2007) has discussed the policy implications of the fact that entrepreneurs with high growth ambitions contribute relatively more to economic growth than the average entrepreneur. Endogenous growth theories have developed models that come closer to making explicit what drives long-term economic development. Explicit incentives of innovations have been considered as macro level factors have been included so as to explain why individuals would engage in creating new technologies and better ways of producing goods and services (Barro and Sala-i-Martin 1995). The study of the macro and micro level factors is important to this study because, the factors in turn influence the growth characteristics of the firm. The characteristics of high impact firms are discussed in the following section. Characteristics of a high impact firm: While studying the methods of fostering high impact firms one must understand the characteristics of these firms. The characteristics of high impact firms have been studied and discussed extensively in BERR (2008), NESTA (2009a) and Henrikson and Johannsen (2008). This section details the different views of academicians as to what characters are inherent to high impact firms. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 11 of 49

12. It can be assumed that the definition of what precisely governs a high impact firm is meaningful in terms of the different policies that it employees. When one looks at the various definitions extended with respect to “high impact” there is no accepted version by academics or practioners Caves (1998). There is no agreed definition and particular application and there is often recourse to a subjective and pragmatic classification at different levels of industrial disaggregation. High growth firms have been characterized over the past based on their employee turnover rates. Determination of the different employment changes is one of the most important standard ways to measure and determine growth. It was observed that at least ten to twenty percent of change over a period five years may account for a high growth firm (Birch, 1998). White and Reynolds (1996) observed that measures like the growth observed in the profit of material, the increase in the marketing and sales, book value as well as future expectations may also influence the definition of a high growth firm. There are three approaches to the definition of a high impact firm as indicated by Harris and McArthur (1975). These measures include purely subjective ideas, drawing a distinction between the products produced and the different product innovation strategies, using different surrogative measures to increase the impact of the firms. Weiss (1985) discovered the association between high technology as well as high impact firms. He proposed that most high technology firms develop into high growth firms not only because of their research and development but also because of their high growth in output and sales. It has also been observed that high impact firms are influenced by ideas like employment growth, employment composition which may not necessarily be a correct indicator (Langridge, 1984). The study of the different characteristics which influence the growth of a high impact firm is very vital to this research report, as these characteristics are the ones which set the platform to determine measures to foster growth of high impact firms. 2.3 Patterns of growth in high impact firms: This section of the review of literature concentrates on the different growth patterns of high impact firms. The NESTA (2009b) report has indicated that all the factors which affect a firm’s growth should be taken into account while defining a high impact firm. These factors are reflected only when one analyses the pattern of growth in these different firms. Firms grow in many different ways and that these patterns of growth, over time, can vary significantly and have different causes (Davidsson and Wiklund, J., 2000). The search for an explanation for why firms grow without knowledge of how firms grow has lead to a number of conflicting theories about the causes of firm growth over the years. It has been argued that firm growth patterns are often very closely related to the demographic characteristics of the different firms. There is a well-established view that a firm’s growth pattern is dependent on its age, its size, and its industry affiliation (Davidsson and Wiklund, J., 2000). The concept that firms grow in different ways has lead to the assumption that the reasons leading to this type of growth and the outcome of this growth is going to be completely different (Donckels and Lambrecht, 1995). The expansion of the evidences provided which includes pertinent information about the demographic profile of each growth firm has suggested that the presence of these different characteristics can definitely affect the probability of the type of growth that occurs and how the firm will expand. The firm growth is not static in nature and this view has been supported widely in previous literature. This type of previous research has included en cross sectional designs which have focused on the occurrences of growth and not on the dynamic evolution of changes which have occurred over time © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 12 of 49

13. within these growing firms (Dunne and Hughes, 1996). Cross-sectional evaluation of growth firms is, therefore, problematic in nature as researchers have been unable to understand which parameter to focus on. Such analyses have always precluded the examination of the ordering of the development of each firm. This is important for accurate estimation of how a firm actually achieved growth (Hoy et al., 1996). The patterns of growth of a high growth firm also play a role in the determination of the effect of environment and the barriers to growth of high impact firms which is discussed in the following sections. 2.4 Effect of the Environment on high impact firms: This section details the factors apart from growth patterns which influence high impact firms. The effect of environment on any business organization has been discussed by a number of academicians. Therefore it stands to reason that a study of the effects on the environment on high impact firm will help in the study of fostering high impact firms. Theories have been proposed and empirically supported which suggest that the growth of all organizations are affected by their environments ( Dunne et al., 1992). There are three dimensions of environment namely dynamism, munificence, and complexity which have influenced the growth of a firm. Dynamism which in turn refers to negative stability deals with the level of environmental predictability. This is manifested in the rate of market and industry change and the level of uncertainty about forces that are beyond the control of individual businesses ( Hoy et al., 1992). It is always assumed that stable environments are easier to navigate and this can in turn lead to an environmental stability. This is postulated to be positively related to venture growth. Munificence refers to the environment’s support for organizational growth (Dunne et al., 1992). High munificence enables firms to cope with challenges by providing resources from outside the firm. Complexity represents the concentration or dispersion of organizations in the environment (Dunne et al., 1992). Complex environments, composed of many firms, may be more difficult for entrepreneurs to comprehend. 2.5 Barriers to growth of high impact firms: While the previous sections have detailed the different factors which promote a firm into a highly growing one, one must also account for the different barriers which will prevent fostering of a high growth firm as they have a bearing on the growth of the firms. Access to finance has been listed as a major barrier to growth for a small minority of firms. The BERR report on the Annual Small Business Survey has indicated that businesses aspiring to grow consistently are more likely to seek finance. This indirectly indicates that these firms are more likely to experience certain difficulties when compared with those businesses not seeking growth. Firms which embark on a phase of growth have larger financing requirements than those which do not seek growth. These growth plans may be risky and the return of profit may be delayed. These factors indicate that the different equity investments are the most appropriate type of finance for high growth firms (BERR 2008). There have been a number of studies which have examined the effect of the founder’s gender on growth performance. A research by Stam and Garnsey (2008) has determined that male founders have a positive impact on growth while women entrepreneurs are found to have lower growth ambitions when compared to their male counterparts. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 13 of 49

14. BERR (2008) reports some evidences which indicate that firms which are innovative and have larger management teams are most likely to form strategic alliances. Therefore those firms which do not form Strategic alliances may not achieve as much success as those which enter into such alliances. There has been an evidence of a positive correlation between research and development investments which intensity the company’s performance measures such as sales growth Eisenhardt and Schoonhoven (1996). High growth firms tend to be innovative and inhabit niche areas and this reason why their main product or service is differentiated from others in the market. Those firms which do not try new innovations in their products or their services face the barrier to high growth Littunen and Virtanen (2004). 2.6 Competitive strategy in high impact firm growth: This section indicates the different strategies which can help remove the above mentioned barriers to the growth of a high impact firm. These strategies are to be discussed because they throw light on the different policies and competencies which can be taken up by firms to foster their growth into a high impact firm. Competitive strategy was conceived to be an important factor which promoted the growth of firms. This strategy was discussed in depth by a number of researchers over a long time (Porter 1980).There has been a conception of strategies in terms of three broad business-level choices namely focus, low cost, and differentiation. Focus is also called as narrow scope and it refers to competitive strategies that target a particular set of customers, segment of the product line, or geographic market. The adaptation of the low cost strategy involves the construction of efficient scale facilities (Dess & Davis, 1984).. It also requires an aggressive pursuit of cost reduction and cost minimization in all functions of the organization. There is a need to understand and promote different products offered to customers who are price sensitive (Dess & Davis, 1984). Differentiation strategies are designed to create and market innovative/high quality products and/or services industry-wide (Porter, 1980). According to Porter, the three competitive strategies are alternative viable approaches for dealing with environmental forces. Firms that fail to select one of these strategies are “stuck in the middle” and, therefore, almost always doomed to failure (Porter, 1980: 42). Porter has also determined that the firms which are stuck in the middle lack the investment in low cost structure to compete on price. They also do not have the industry-wide differentiation to necessarily offset the need for a low cost position. They need to focus to achieve differentiation or a low cost within a limited market space. 2.7 Heterogeneity and high impact firms: This section deals with one of the main factors which have made the study of high impact firms more difficult for academicians. This factor is the heterogeneity of high impact firms. There is detailing of the reasons for this heterogeneity and its importance in fostering the growth of high impact firms. Any study that involves high firm studies are by themselves heterogeneous in nature They include a number of variations like the variation in measures used in organizational growth studies, the variation in growth indicators, the variation in the measurement of firm growth over time (Delmer et al., 2003). Other areas like the variation in the processes by which firm growth occurs including areas like organic vs. acquisition and the variation in the characteristics of these firms and their environments are all important features of organizational growth as a phenomenon (Delmer et al., 2003). The different heterogenous factors which influence the growth of high impact firms are indicated below. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 14 of 49

15. 2.7.1 Heterogeneity in firm growth measures: It has been observed by a number of scholars that the diversity of measures used to determine the organizational growth studies have made it extremely difficult and has caused a lot of issues when it comes to the ability of scholars to accumulate and compare results (Delmar, 1997; Murphy et al., 1996; Weinzimmer et al., 1998). The growth of an organization can be measured with regard to the absolute increase in the marketing and the growth in sales which is measured over a period of five years (Dunne and Hughes, 1996; McCann, 1991; Merz and Sauber, 1995; Miller, 1987). The relative employment growth over a time period of three years (Cooper et al., 1994; Donckels and Lambrecht, 1995; Peters and Brush, 1996; Vaessen and Keeble, 1995; Zahra, 1993). The choice of absolute or relative growth is especially important for the relationship between size—and anything correlated with size—and growth. Absolute measures tend to ascribe higher growth to larger firms whereas smaller firms more easily reach impressive growth in percentage (i.e., relative) terms. The implication of the choice between relative and absolute measures is much discussed in the literature and seems to be reasonably well understood by researchers when designing their studies, but frequently forgotten when results are compared with other studies. The issue of time frame has achieved even less attention (Delmar, 1997). 2.7.2 Heterogeneity in the appropriateness of specific firm growth indicators: An overlapping problem to the heterogeneity in growth measures of firms is the ideas and choices of validity, and reliability of different growth measures. These have been determined from theoretical and methodological perspectives by a number of authors (Chandler and Hanks, 1993; Weinzimmer et al., 1998). Some authors have concentrated on different growth indicators which influence the growth of any firm within a short interval. Ardishvili et al. (1998) along with Delmar (1997) have arrived at almost identical lists of possible growth indicators. These include assets, employment, market share, physical output, profits, and sales. Among these listed indicators, sales and employment have found to be the most important indicators. The use of sales and employment measures are the most widely used in empirical growth research as indicated by Delmar (1997). The other indicators that have been studied and a number of authors have discovered different shortcomings that limit their applicability outside of very special contexts. If we consider indicators like market shares and physical output it can be determined that these can only be compared within industries for firms with a similar product range (Delmar 2003). Using this as an indicator along with other indicators like total asset value is highly related to the capital intensity of the industry and sensitive to changes over time. And, while profits are an important indicator of success, the relationship of profits to size is only evident in aggregates of firms or over long periods for individual firms (Delmar 2003). There seems to be an emerging consensus that if only one indicator is to be chosen as a measure of firm growth, the most preferred measure should be sales (Ardishvili et al., 1998) and (Hoy et al., 1992). It is relatively easily accessible and firms which come under any category and can it applies to almost all sectors of firms. It is also identified that sales is a relatively insensitive factor when it comes to capital intensity and degree of integration. There have been arguments made that sales are the best indicator and can be considered to be highly suitable indicator when used across different conceptualizations of the firm (Davidsson and Wiklund, 2000). It is also the indicator favored by entrepreneurs themselves (Barkham et al., 1996). The demand and, therefore sales is a precursor of growth in other indicators, i.e., the nature of the growth process itself points to sales as a natural choice (Delmar, 1997) (Flamholtz, 1986). © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 15 of 49

16. 2.8 High growth firms and employment growth: High growth firms were also referred to as Gazelles by David Birch about a quarter of a century ago. He indicated that this small group of high growth firms will help generate the bulk of new net jobs and help in boosting the economy (Landström 2005). These firms were contrasted with the vast majority of firms which start out small and grew very less. The majority of firms contributed quite less to the growth of employment and some other firms which had large employment share but employment growth. These two types of firms were aptly denoted “Mice” and “Elephants”, respectively. However his claim was not substantiated by empirical proof. Henrekson and Johansson (2008) identified a total of twenty studies published after 1990. The studies vary in their scopes and methods and have used different metric methods and investigate different industries over different time periods and in different countries. They discovered that there was no uniform definition or defining factors with regard to the importance of high growth firms in boosting the economy of the country. Some general findings of Henrekson and Johansson (2008) report with regard to the role of high impact firms on the economy particularly in are as follows: 1.An analysis of different studies on high growth firms have indicated that net job growth is a crucial factor when compared to non-HGFs. They generate a large share of all the new net jobs. During recession this factor has been found to be particularly pronounced. During these periods of recession HGFs continue to grow when compared to non-HGFs which decline or exit. 2.Several studies in the United States have indicated that in the U.S. the HGFs provide a large share of new net jobs. This is relative to total job growth in the economy and total net unemployment in the population. 3.Small firms are overrepresented among HGFs, but HGFs are of all sizes. It is seen that larger firms are important job contributors when analyzed in absolute terms. A small subgroup of large HGFs has been identified. These are called as Superstars or Super Gazelles and are considered to be the major job creators in the sector. 4.Age is undisputedly of great importance when it comes to the analysis of high growth firms. Most of the studies summarized have reported that high growth firms are younger on average. Super Gazelles are also reported to be relatively young. HGFs are overrepresented in young and growing industries which in turn influence the high employment growth. 5.Young and small high growth firms grow organically to a larger extent when compared to large and old high growth firms. They make a much larger contribution to net employment growth with this steady growth. 6. HGFs are present in all industrial sectors. So far there is no evidence that they are overrepresented in any type of high-tech industry. There is ample evidence of high growth firm in many sectors thereby contributing to employment growth. Henrekson and Johansson (2008) 2.9 HGF and economic growth: Canada (1998) identified fourteen different variables below related to the substantiating growth of a high growth firm which in turn lead to the growth of the economy. These factors include product life cycle status, new product introductions, emerging technologies, investment in R&D, distribution of R&D expenditures including ideas of new product, improved product and improved production, market, sales, planned expansions, export sales growth, regulatory changes, projected employment needs, projected utility service needs, jobs added, and space added. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 16 of 49

17. HGFs are instrumental to economic growth specially those high growth firms that start growing rapidly when young and small. Recent evidence has been identified by Henrekson and Johansson (2008) which supports this conclusion. High growth potential can be measured by looking at the total entrepreneurial activity. This is measured according to the Global Entrepreneurship Monitor (GEM) study. This study had indicated that entrepreneurship in High growth firm sector has positive effect on differing rates of economic growth across nations (Wong et al. 2005). Sternberg and Wennekers (2005) have indicated that these findings influence the implications for entrepreneurship policy in highly developed economic countries. From an economic growth perspective there is a need for policies to focus primarily on potentially fast growing new firms which will in turn lead to the economic growth of the nation. There are empirical findings which have shown that high growth firms on an average are both younger than other firms as well as over represented in new and rapidly growing industries. It has also been found that young firms seem to be more prone to explore new fields of knowledge with inspiring innovations which lead to a growth in the economic potential of the firm, while large and mature firms though dominate established areas may not see a drastic growth in observed economy (Almeida 1999). Analysis of these findings by Henrekson and Johansson (2008) has shown that high growth firms can firmly promote the economic growth in a much faster rate when compared to the other firms. Acs et al (1999) and Acs and Audretsch (2005) have discovered that old and large firms dominate process innovations. It is also seen that young and small firms play a greater role in product innovations. This distinction is important because product innovations appears to be more important than process innovation for long-run growth and improved economic potential. 2.10 Competence blocks in HGFs: The following figure establishes the different competence bloc and the role of the various actors in the process of fostering HGFs as indicated by Henrekson and Johansson (2008) . This figure gives a representation of the different categories of actors in the competence bloc. It also clearly depicts the growth phases of HGFs which include the development of a business idea, introduction, early growth, rapid growth into a large-scale firm. This is depicted in the form of an S curve. Most high growth firms do not display sustained growth, but follow a more complex pattern (Parker et al. 2005) The figure also shows at which stage of a firm’s growth different categories play key roles. The order in which the categories appear beneath the boxes denotes which actor has the main coordinating responsibility and who support this main actor. Some categories of growth may be important in several phases. A certain individual can fulfill several functions either simultaneously or at different points in the individual’s or firm’s life cycle (Henrekson and Johansson 2008) The first phase of commercialization which includes the introduction and early growth of firms stage mainly involves entrepreneurs while skilled workers are involved to a very small extent. Industrialists are active in the phase of industrialization and rapid growth as they have the financial backing to make it possible however one cannot discount the need for a great deal of skilled labor. Venture capitalists are important financiers in the earlier phases mainly during the business idea development as well as the introduction of the firm. In later phases when the firm is larger, this role is taken over by players in secondary markets who are capable of investing a lot more when compared to venture capitalists. Competent customers are typically involved in all phases and ultimately along with other customer finally determine the demand for the good in the market (Henrekson and Johansson 2008). © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 17 of 49

18. . There are also spatial dimensions to the theory of competence blocs which are discussed by (Henrekson and Johansson 2008). They have reviewed these dimensions discussed by a number of other authors. One spatial dimension is that some industries cluster around certain sources of raw material availability which includes forest, agriculture, mining and other sources. The stages of the product life cycle as depicted in the figure may be geographically separated. This is because different areas may be more conducive to different kinds of knowledge discovery and knowledge exploitation (Stam , 2007). Competent consumers Developmen t of competent ideas Industrialization through rapid growth into large scale firms Commercialization, industrialization and early growth Stagnation and decline Entrepreneurs, Inventors and Venture Capitalists Action in secondary market Industrialists Entrepreneurs Skilled Labour Venture Capitalists Entrepreneurs Skilled Labour Action in secondary market Industrialists Skilled Labour © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 18 of 49

19. Firm size Rapid Development of a business Early Introduction Time Figure: Competencies and Blocs fostering High growth firms Adapted from (Henrekson and Johansson 2008). Duranton and Puga (2001) note that cities favorable for diversified knowledge are more suited in the early phases of the product cycle when generation of ideas is crucial, while cities advantageous for specialized knowledge are more suited for production stages. Local institutional conditions may affect the workings of competence blocs. It may also influence the ability to generate HGFs.. These competencies and blocs also contribute to the analysis and arrival of the different factors influencing the growth of high impact firms. 2.11 Innovation and growth of High impact firms: It is important to study the importance of innovations as they are the key stones which contribute to the development of high impact firms. Economic literature has shown a strong relationship between innovation as well as growth (Jones and Williams 1997).This is an extension of the firm heterogeneity theory which has stated that for one firm to perform better than another there is a need for some very specific attributes. These special attributes can be obtained using innovation. Acs (2008) has defined innovation as the introduction of a new good or service into the market with the presence of a distinctive quality improvement and possessing economic rent. Innovative firms are said to make the most of invention help in generation of productivity and distinctly help in the contribution to the economic growth of the country (Acs, 2008). High growth firms have been observed to contain more innovations than low impact firms and it is seen that these firms tend to explore © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 19 of 49

20. niche areas (BERR Report 2008). The products and services provided by these firms have been found to be visibly different from those of the competitors (Litunnen and Virtanen, 2004). There are four main principles which drive high impact innovation of the in high growth firms as indicated by Acs (2008). These include: • A clear challenge statement which can express aspirations to a worthy goal. This cannot be carried out without prescribing the means to achieve this end. This statement should be expressed in terms of a customer need and not a business need. • There should be establishment of a well-designed, well-facilitated process. This process should include multidisciplinary participation and sources of cutting-edge ideas to promote economic inflow. • There should be emphasis on developing concepts that combine multiple elements of innovation. These concepts often include business models, IT platform, and channels to increase impact and distinctiveness. • The establishment of different techniques and structures that ultimately counterbalance the forces of risk aversion in the market. Cameron (1998) has surveyed and discovered empirical evidence between innovation and growth. He has determined that there are number of different measures of innovation which include R and D spending, patenting, innovation counts, pervasive effect of technological spillovers between firms, industries and countries. This helped Cameron make two conclusions. Innovation makes a significant contribution to growth Significant spillovers are seen between countries, firms, industries and to a lesser extent government funded industrial research. Acs and Armington (2006), Cameron (1996), Audretsch et al (1996) have all recognized that one of the crucial contributions to firm level growth influencing the economic welfare and prosperity is innovation. Acs (2008) has determined that innovation and growth can be interpreted as something which is much more than state guided efforts to ameliorate static market failures. Innovation has allowed the economy to lift individuals out of poverty and has enabled in the provision of an improvement of the market. Cameron et al (1996) has determined that firms with market dominance, like high impact firms, are more likely to engage in innovative ideas. This is because it is more feasible for them to balance the risks of innovation with their super normal profit. Finally the importance of innovation in the research has been highlighted in order to indicate the need for entrepreneurs in the quest for measures to foster high impact firms. 2.12 Conclusion: The above critical review has established the importance as well as the sustenance of high growth firms. The research hence forward would extract the available secondary literature with regard to high impact firms and their performance in the United Kingdom. The research would also concentrate on the proposed policies and regulatory frameworks available in this section. The research would then try to link the various factors identified in this literature review – employment growth, innovation, finance, entrepreneurial choice, competencies and other miscellaneous features to measures to foster high growth firms. The factors on the applicability of these factors on the latest distribution of high growth firms in the UK will be considered. It will help identify suggestive guidelines for methods to foster high growth firms. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 20 of 49

21. 3.0 Methodology: 3.0. Introduction: This chapter presents the study’s selected research methodology. As shall be seen, the methodology is influenced by the purpose of this study and is based on an assessment of the optimal strategy for responding to the research objectives as well as the research questions. As such, the current chapter reviews the purpose of the study, presents the research questions and hypothesis, and discusses the data collection and data analysis procedures and the limitations of the research. 3.1. Research Question: The research questions proposed at the introduction of this hypothesis is what are the different methods to foster the growth of different high growth firms? 3.2. Hypothesis: From the literature review section, it is clearly seen how high impact firms through enhanced productivity and job creation have contributed significantly to the economy of the country. It has also been highlighted on the different characteristic features of these firms which influence the way they function as well as dictate their chances of growth. Given their economic importance, the research hypothesis proposes that in order to promote the fostering of high impact firms it is necessary to look at two impact implications. Therefore the hypothesis to be tested involves two components A study of the existing structural behavior of the high impact firms in the UK is important to arrive at measures to promote fostering of high impact firms. Policies need to be directed at high impact firms to facilitate fostering of high impact firms. 3.3 Research Design: The study, like it is clear from the research question, hypothesis and Chapter One, examines a single problem. This problem is the determination of the measures by which fostering of different high growth firms can be brought about. Problem of the study emerges from this focus. In a realist research the hypothesis is more of an explanation rather than a set law to be tested. Research can be objective oriented, whereby the objective is the focus of the research or it could be hypothesis oriented, where the testing of the hypothesis is the most important focus of the research. The researcher is set to be of the former kind and it sets out to derive the facts rather than help in their induction. A design is used to structure the research to show how all of the major parts of the research project the samples or groups, measures, treatment as well as programs. These methods of assignment work together to address the issue of the central research problem. The research design is basically a plan which has been taken up to answer the research questions previously put forth in this report. This design aims at answering the questions validly, objectively and accurately. It is therefore the arrangement of conditions for collection and analysis of data. This arrangement is often done in a manner which enables us to combine relevance to the research purpose. The research design undertaken basically has two important functions. They relate to the identification and development of protocols as well as the logistic arrangements made to make sure the study goes on © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 21 of 49

22. uninterrupted. Another important function of this procedure involves establishing the validity and objectivity of the research. The research design adopted aids in the following: 1.Conceptualizing the operation plan and putting in place the research design and schedule required to complete the project undertaken. 2.Validating the procedure, obtaining accurate and acceptable answers to the put forth research questions. 3.4. Research population: Hair et al., (2007) states that research data can be obtained in a number of ways. It has been clearly indicated in the review of literature that high impact firms often form only 3% to 4$ of the entire firm population (Storey 1994). However these high impact firms are often present in a number of different sectors it is observed that it is very difficult to conclude on their different features. It is also observed that there are many more common characteristics which can be attributed to the different firms in these categories. A criterion which has been established to determine these high impact firms has been established earlier and high impact firms which fit this criteria are to be studied in this research report. For the purpose of this research it is also clearly established that the OECD definition of high growth firms has discussed in the literature review has been used in order to shortlist the target population. In order to ensure the quality of the data generated authenticated sources like US Small Business Administration, Department for Business Enterprise and Regulatory Reform (BERR) and previous evidences have been used in this study. In order to avoid numerical bias, a suitable sample size has also been maintained in this study. It has been established by Economist (1997) that a minimum number for statistical analysis needs to be established in economics as it helps in the provision of a useful rule of thumb for the smallest category in each category. The literature review has highlighted how the different characteristics of firm as well as entrepreneur characteristics have played a very important role when it comes to the determination of the style of functioning and performance of the firms. The features of sampling units have been analyzed for determination of inferences with regard to the research hypothesis proposed. The research on high growth firms is an emerging field where there is extensive literature lining up. This research design of a “realist approach” involves both a quantitative versus qualitative analysis as well as deductive versus inductive approach. These approaches help in arriving at a subjective study. Therefore the results presented in the following chapter of Findings and Analysis should be regarded as a suggestion proposed by the researcher and not as a conclusion. 3.5. Research Methodology: The methodology adopted should enable the promotion and understanding on an in depth analysis of the impact of high growth firms. This research will involve bringing out the different measures to promote fostering of high impact firms and how they in turn would influence the national economy. Thus the realist approach as proposed by Fisher (2007) is determined to be the best course of study. The research is broken into constituent parts which makes it easier to establish cause and effect relationship between the firm’s characteristics as well as the probable methods to promote fostering of high impact firms. This helps in displaying specific patterns which can be observed across the cases and common behavioral pattern can be established. These patterns can suggest the research pattern to promote fostering of high growth firms. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 22 of 49

23. Table 2: Type of research proposed Type of Research Action proposed Characteristics Realist Research Identification as well as evaluation of the different options to promote fostering of high growth firms Cause and Effect Qualitative vs Quantitative approach Inductive vs Deductive approach Source: Adopted from Fisher (2007) It has been established by Bryman and Bell (2007) that there are two research strategies which can promote this realist design: 1.Qualitative versus quantitative approach 2.Inductive versus Deductive approach 3.5.1. The Deductive versus the Inductive Approach: Marcoulides (1998) defines the deductive approach as a testing of theories to promote their area of research. The researcher begins with a set of theories in mind which help in the formation of the hypotheses and their basis. After that, the research tests the hypotheses. The inductive approach, on the other hand, follows from the collected empirical data and forms concepts and theories on the basis of this data (Marcoulides, 1998). Figure 1: Deductive Versus Inductive Approach Source: adapted from Trochim (2001) Like the figure above shows, the difference between the deductive and the inductive approaches is that one follows a top-down and the other a bottom-up approach. This study follows the deductive approach for two reasons. In the first place, it is beyond the expertise and the academic knowledge of the researcher to propose a theory and then test it through observation. In the second place, the deductive approach appears more appropriate to the purpose of this study which is to gather the key determinants which help in fostering high growth firms from the literature and then determine how they translate into practice in an effort to evaluate current practices and propose strategies for improvement. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 23 of 49

24. 3.5.2. The Qualitative versus the Quantitative Approach: The quantitative tools for data analysis generally borrow from the physical sciences, in that they are structured in such a way so as to guarantee as far as possible objectivity, generalization as well as reliability (Creswell, 2003). Here the researcher is objective and the research results are. Qualitative tools, on the other hand, are based on content analysis, among other things and are presented in non-numerical format. Most of the results obtained by this method have been classified to be subjective in nature. The value of qualitative data analysis cannot be denied. Creswell (2003) has explained it allows researchers to conduct in-depth explorations of a particular phenomenon. . It has also been indicated by him that qualitative research allows researchers to conduct in-depth explorations of a particular phenomenon. This method is useful to identify key determinants of operational research (Bogdan and Biklen, 1992). It is also indicated that qualitative analysis of the data enables the researcher to make the process of the study accessible and write descriptively so tacit knowledge may best be communicated through the use of rich, thick description (Myers, 2002). The objectives of this research combine quantitative as well as qualitative research methods. With the quantitative method it is possible to classify features count them as well as bring about different statistical models which explain what has been observed (Miles and Huberman 1994). It has also helped in the measurement of frequency of aspects and helps in answering the questions of structural behavior of high impact firms. This is applicable to my research because they enable tracking the number, age of firms as well as measuring their contribution to the economy. The qualitative approach is used in order to determine the different policies proposed and the regulatory frameworks established which help in the determination of how these mechanisms link one variable to another (Fisher 2007). This will enable portrayal of the findings of the study which influence the firm behavior as well as specify the policy implications. This directly leads to determination of methods to foster high growth firms. Thus data sets from the different commercial sources, regulatory bodies and previous papers have been used to promote this deductive, qualitative and quantitative study. These sources have been determined as one of the most conventional as well as safe source of data (Saunders, Lewis and Thornhill, 2003). 3.6. Data Collection: An ideal approach to studying high growth firms would be to specify a definition of high growth firms and seek identification of the populations of these firms within UK. This helps in finding comprehensive data on the characteristics of these firms and comparing them to other firms across the countries. In addition the different policies and regulatory framework proposed helps in determination of the different stages of high growth firm life cycle. Secondary data is primarily collected through desk-based research. According to Jackson (1994) the value of a research is related to its data collection methods and importantly, whether or not it includes both secondary and primary data. As Creswell (2003) states, secondary data, which is an unobtrusive data collection method, depends on the location of pertinent and verifiable previously published academic studies and theories. After locating such data, the researcher should critically evaluate it in order to make sure that it is valid and reliable. This means that the researcher should only include in his study secondary data which is presented in academic researchers and articles which are verifiable and well-referenced (Creswell, 2003). Out of this © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 24 of 49

25. consideration, the researcher of this study only used data which was obtained from electronic databases or libraries, articles or books and which was scholarly. As mentioned in the methodology above the research aim is to achieve depth in the subject of research. Therefore a case study approach is the most appropriate. It is quite evident from the literature review that the data regarding high impact firms, their traits as well as the contribution to the growth of the UK economy is progressing. Data availability and its quality have been the main hindrances to this research report. With many definitions of high growth firms existing, it is difficult to directly use collected data. The chief sources of data for my research are the following: BERR report (2008) NESTA report (2009a) NESTA report (2009b) Journals and Papers The BERR report contains different particulars with regard to firm behavior in the high growth category. It contains statistical evidence for various features and trends in the high growth category. It is also contains statistical evidence for various features and trends in this particular category. The NESTA report is an unpublished working paper which again gives highlights to the structural behavior of the growth of high growth firms. 3.6.1. Quantitative approach through statistical databases: Datasets from commercial databases and reports and findings of previous work has been one of the prime sources of data. The data listings used in the BERR Report (2008) is directly relevant to the contents of this report. They are a genuine source of data belonging to a recent time period which provides us with ample information about the well assembled data. The data from NESTA (2009) has been used extensively. These data are to be studied from the angle of a role in economic development and structural behavior which will lead to methods of fostering high growth firms. 3.6.2. Qualitative analysis: In this section the data from previous papers, journals and the quantitative analysis were scrutinized to study category wise behavior and their reasons. Miles and Huberman (1994) stated that in order to classify the processes in a qualitative data analysis. These include data collection, data reduction, data display, drawing a conclusion and verification of the above mentioned findings. The data was collected from the various reports and journals. This data was then reduced to filter those which don’t satisfy the criteria specified. The data was then simplified and transformed to make the data more manageable in analysis. Data was displayed in forms which enable deeper understanding of the different features studied. The necessary conclusions of fostering methods were determined and finally data verification was carried out to ensure that the initial conclusions were realistic, supported as well as validated. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 25 of 49

26. Figure 2: Steps in Qualitative data analysis Data filtering and editing Data Collection Data Display Conclusion and verification Adapted from Hair J Money, A Samuel P and Page M (2007), Research methods for business, John Wiley and Sons, England 3.7. Ethical Consideration: Ethical issues arose at different stages in the research. Out of the main areas of ethical consideration as identified by Diener and Crandall (1978) the following are related to this research. These include, whether there is a lack of informed consent, where there is a misuse of information and whether there is deception. These aspects were taken into account throughout the period of this research. Ethical standards play a very important role in my dissertation and hence high consideration will be given. It is seen that all the data used has been properly referenced and quoted in the bibliography. The author has also taken efforts to ensure that the views presented in this document are subjective and do not have any set conclusions. 3.8 Conclusion: A research hypothesis which is related to the factors influencing high impact firms and their inference for fostering high impact firms, was developed in terms of the research objectives and literature review. The realist approach was adopted successfully as it suits the nature of the research. The research population was decided upon and accordingly a combination of quantitative and qualitative research was applied to realize the research objectives as well as testing the hypothesis. Ethical issues were considered through every step of the research. The collected data are now analyzed to derive relevant conclusions. As this chapter has argued, the research methodology that is most suited for this study is a qualitative, quantitative, deductive one which uses a major amount of secondary data. The next chapter will present the results of the qualitative and quantitative analysis as obtained from the different sources mentioned in this study. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 26 of 49

27. Figure 3: Over view of research methodology Literature Review Hypothesis Qualitative Quantitative Methodology “Realist Approach” Ethical Consideration Data sources: Secondary data Data analysis © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 27 of 49

28. 4.0. Findings and Analysis: 4.1. Introduction: This chapter of the report focuses on data analysis. In this report there is a discussion of findings which can be broadly brought under two different sections. The overview of the existing high growth firms in UK and their structural aspects is discussed. Secondly there is a concentration on the different policies as well as reviews which can be made in order to foster high impact firms. There is a scrutiny of a number of recent reports on high growth firm behavior and their characteristic features. This section can be discussed broadly in two different ways: 1.Quantitative analysis: Provides the characteristics of the existing high growth firms in UK and their structural analysis providing reasons to promote growth of high impact firms. 2.Qualitative analysis: Analysis of different secondary data to arrive at policies and regulatory frameworks which will influence the growth of high impact firms. 4.2. High impact firms in UK: This section studies the impact of high impact firms on a number of issues of the economy. These factors are justified in the literature review and the detailed analysis in this section reflects the different policies and regulatory frameworks which have been proposed by the UK government discussed in the next section. 4.2.1 Financial source: The different micro and macro factors discussed in the literature review also showed the importance of finance as a significant pillar of high growth firms. The degrees of risk and level of information asymmetry influences the cost of capital that influences the start up of a business. This is found to be very crucial in times of credit crunch. The BERR Analysis (2008) has clearly pointed out the limited data available with regard to the methods of finance used by high impact firms. The importance of venture capital which is the savior for high impact firms has also been discussed in depth earlier in this dissertation report. BERR analysis has shown that about 14 percent of the UK HGFs firms had accessed venture capital which compared to that to 7 percent in the United States. BERR (2008) report gave the results University research which indicated that U.S. firms are often much older than the UK firms therefore they have access to debt based finance rather than external equity. The US firms are found to have better access to finance and some of them even contain self financing capabilities. This may be considered as indication of personal wealth in the startup stages of a firm (indicated in Table). of the Kingston © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 28 of 49

29. Table 3: Use of external equity finance among UK and US high growth firms sof External Equity UK US Use of External Equity UK External equity 13 No external equity 8 US 6 12 18 ALL 21 Source: Kingston University (2008) The research report by Kingston University has also indicated that the US firms were more likely to have obtained, or be seeking business angel finance when compared to venture capital finance. The reasons behind this can be indicated by the need for the US firms to consider the fact that angel finance can be perceived as a factor which has provided greater flexibility, patience for returns as well as valuable business advice. It can also be seen that the technology companies in the UK were considered to be more likely to favour venture capital and view it as a crucial factor to promote growth. An analysis of this research conducted by Kingston University has implied that there are significant differences in the finance choices of the high growth firms in the UK and US. This difference can be seen particularly in terms of the use of venture capital. This makes the researcher conclude that US firms have a greater access to personal wealth, as a result of the presence of the wealth of US entrepreneurs while there is a greater desire for business angel finance among the UK founders. This indicates the need to develop policies which promotes more entrepreneurs which in turn will directly foster the growth of high impact firms. There may be many more factors which are specific to specific high growth industries which may affect the mode of finance for fostering high growth firms. These have to be studied in detail as they bear implications for policy directions especially with regard to financial institutions. The researcher has also pointed out certain important pertinent factors. There has been an exaggerated concentration of innovative industries and their clusters which seem to relate directly to investments as well as supportive policies. However the researcher strongly believes that these policies are not reflective of the nature of reality in the high growth sector. 4.2.2 Location: With regard to the location of high impact firms in the UK, it can be observed that the BERR Report (2008) has discovered a very heavy concentration of high impact firms in the South east and London regions. After the adjustment was carried out to factor in the regional economy sizes it was found that London and south east accounted for 33% of UK’s GVA. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 29 of 49

30. Figure 4: Regional distribution of UK high growth firms: Number of high growth firms per £1bn regional GVA Source: Inc, Fast Track and BERR analysis This analysis has been found to be consistent with regard to the results of Mason (1985) and Miller (1991). This concentration of high impact firms in both London as well as the South east region of the UK has been indicated in the NESTA report (2009). The NESTA report has tracked the region wise distribution of firms attaining the 10 employee threshold as indicated in the following table. The dominance of London and South east regions of the UK has been highlighted in this finding too. Table 4: Locational classification of HGFs High growth firms location in 2005 East Midlands 740 East of England 979 Greater London 2103 North East 357 Northern Ireland 364 North West 1151 Scotland 830 South East 1583 South West 883 Wales 596 West Midlands 904 Yorkshire & Humberside United Kingdom 11,369 Source: ONS Business Structure Database, NESTA 2009a Report Number of firms Number of firms in 2008 720 1025 2219 389 303 1199 1030 1689 900 335 851 870 879 11,530 © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 30 of 49

31. The above table also reveals certain other findings. It can be seen that certain regions like Wales and Northern Ireland in 2005 and Scotland and North East regions in 2009 have exhibited above average presence of high growth firms. Therefore the researcher tries to relate this growth and provide better policy attention as well as give a distinctive regulatory framework in order to foster more high impact firms. 4.2.3. Sectoral composition: The literature review has discussed in depth the importance of heterogeneity in high growth firms. The report by BERR (2008) as well as NESTA (2009) has suggested that high growth firms exist in all sectors of the economy. However it has been seen that there are many heavily concentrated firms in the different dynamic sectors of the country. This was analysed by BERR (2008) in the UK and US samples. The following table shows the sectoral composition of the UK and US samples can be classified to be broadly similar. Table 5: Sectoral breakdown of UK and US firms K US Sector Business services Telecommunications IT services Finance Leisure and media Retail Engineering manufacturing Construction Food and drink Health Consumer goods Energy Education Government services Other Source: Inc, Fast Track and BERR analysis UK 20 US 25 and recruitment 15 7 12 19 9 7 9 4 7 1 and 6 4 4 5 4 1 3 7 3 1 1 4 1 0 4 2 7 5 © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 31 of 49

32. On analysis if the above table certain striking differences may be observed. It is seen that about 10% of the HGFs in the US belong to governmental services however this is significantly absent in the UK. Despite the fact that a number of the UK firms have a number of governments contracts and are in sense working for the government. While this may indicate that the government of UK has a certain role to play in promoting to the success of the UK firms, the availability of government contracts are found to form only parts of the firms’ business therefore these firms are not classified as belonging to the government services sector. The analysis of the sectoral composition of the high growth firms is important because there is a need to concentrate on ideas to foster high growth firms in IT services, health and business services as growth of HGFs in these sectors are not as high as the growth of high impact firms in the areas of telecommunications, media and retail sectors. 4.2.4. Creation of employment: It has been discovered that firms employing below 50 employees have accounted for over 80% of high growth firms in the UK (NESTA 2009a). Figure 5: Employment profile Source: ONS Business Structure Database, NESTA 2009a Report However it has also been discovered that with regard to job creation it can be seen that half of the 2.67 million jobs in the 11369 high growth firms as listed in 2005 has more than 250 employees. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 32 of 49

33. It was also discovered in the NESTA (2009a) report that firms with more than 250 employees increased their average size threefold from just over 1,000 employees on average to around 3000 employees in just three years. The pattern of job creation as a result of high growth firms was also analysed in the NESTA report (2009a). It was discovered that firms which employ more than 250 employees were found to be responsible for creating atleast 45% of jobs as depicted in the following table. Table 6: High Growth Firms in 2005-2008 (Job Creation) Source: NESTA 2009a report It can be seen that small High Growth Firms which employ less than 50 employees create atleast 400,000 jobs in 2008. Therefore the researcher indicates that there is a need to look at policies to foster the growth of high growth firms in order to promote job creation especially in times of the subprime crisis. 4.2.5. Summary of quantitative analysis and implications for the qualitative analysis: It was seen how high growth firms despite being spread across all the sectors not much of high impact firms in the IT and the high tech sectors. This indicates that there is a need to foster growth of these firms. It has also been discovered that there while there is the promotion of venture capital as a preferred mode of finance in the UK HGF development a concentration on promotion of entrepreneurs may in turn help in fostering more number of high impact firms. It has also been seen that high growth firms with less than fifty employees form about 80 percent of the total population in the HGFs in UK. However they contribute less than 26% to employment when compared to firms with more than 250 employees which has created more than 50% of the HGF jobs. This quantitative analysis has indicated a need to qualitatively analyse the current policies established as well as the regulatory framework established. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 33 of 49

34. 4.3. Policies and regulatory framework: There has been considerable progress in promoting high growth firms in the UK over the past ten years. At the end of the year 2006 there were a record number of businesses standing at 4.5 million which is seven hundred and fifty thousand more than in 1997 (HM Treasury, BERR, 2008). The United Kingdom today is recognized by numerous international organizations to have the best possible business environment in the World for promoting the growth of any business: The OECD considers the UK to have the lowest barriers to the growth of any firm among all the countries in the OECD panel (OECD, 2005). The UK has been ranked second in Europe by the World Bank in the top ten countries on measures of the ease of doing business (World Bank 2008). Over the last few years it has been established that the UK’s finance market can be ranked third best in the world for supporting a fast growing businesses’ financial needs (Milken Institute Capital Access Index 2006). Keeping this in mind, in this section the researcher has examined the different policies as well as regulatory frameworks which have helped high growth firms in the UK. This section also discusses the ideas that policy makers should keep in mind while framing regulations which impact high growth firms. 4.3.1. Need for policy intervention: Every year when the government puts forth policies or regulatory framework they concentrate on the reasons why there is market failure. Over the last few decades the occurrence of a number of market failures has provided justification for policy response to support high growth firms (Colombo and Grilli 2005). High growth businesses are a key driver of economic growth as they grow themselves and generate significant employment growth. Their dynamism stimulates competition and innovation throughout the economy as a whole. High growth businesses exert the greatest competitive threat to other businesses. They are also likely to provide a stimulus to promote productivity growth amongst rival businesses. High growth firms can be seen as those organizations which promote benefits for the whole economy (Davidson et al., 2005). There have been evidences which show that many firms have growth aspirations but fail to realize these due to barriers and market failures. This section has highlighted the different barriers that need to address to foster high growth firm growth. These barriers can be overcome if set policies and regulatory frameworks are issued by the government in order to promote the productivity of these firms thereby increasing their ability to progress into a high growth firm (Schreyer, 2000). 4.3.2. Polices implemented by the UK government: Over the last decade the government has introduced a number of important enterprise policy reforms. These reforms have improved the environment in which business operates and have helped to promote firms to grow. Some of these reforms areas as indicated in the HM Treasury BERR report (2008) are as follows: © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 34 of 49

35. The launch of the first phase of Enterprise Capital funds which has helped many small high growth firms grow and develop The Small firms Guarantee loans have be reduced to decrease the barriers in accessing finance by growing businesses. The introduction of administrative burden reduction targets has helped newer firms achieve greater growth. There is also the establishment of just two annual commencement dates for new legislation affecting business. Establishment of Enterprise week which has helped more people to think seriously about starting a business and develop their existing enterprising skills to contribute to the economy. The improvement of the performance management of different business link operators to improve high levels of business satisfaction thereby causing a doubling of the existing customer base and to ensure different entrepreneurs have access to the high quality support they require to establish themselves as small high growth firms (HM Treasury, BERR, 2008). This section has highlighted the different governmental policies with regard to improving status for entrepreneurs which in turn can reflect on the “business angel” requirements indicated in the quantitative section. 4.3.3. Macro and micro economic policies: Alongside the existing macroeconomic framework which has concentrated on improving the employment rates in the country the UK Government has delivered ways of improving the existing microeconomic reforms. These reforms have been focused on raising growth of existing firms mainly with the purpose of increase in productivity. The Government has introduced certain specific policy reforms which are aimed at improving the contributions of the other drivers of productivity, competition, innovation, skills and investment. These are the current micro economic policies proposed in the House of Lords in the 29th session of 2007-2008. Identification of R and D along with different innovations and encouragement of details with regard to entrepreneurship are important micro economic challenges which are facing the different High impact firms and the authorities have identified these matters. They have shared their analysis of existing conditions and given ideas to improve the quality and the efficiency of the transport infrastructure. This is because improvement in these conditions is what will lead to productivity and growth (European committee report 2008). There has been a mix of measures for improving the existing research and development functions which may help in the improvement of UK policy priorities. The presence of the current existing ten year science and innovation investment framework has helped rectify a period of consistent under investment and promoted the growth of more high impact firms. The NRP has indicated that the existing schemes, measures are not enough and further policy initiatives are required in order to promote the government’s existing target of 3.5% increase in the number of high impact firms especially in the R and D industry. There has to be means to promote the development of innovations and clusters which are linked to universities and existing cross border knowledge transfers (European committee report 2008). © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 35 of 49

36. The UK government has identified the need to encourage entrepreneurship and promote better regulations. The NRP has mentioned a number of current existing SME initiatives which when implemented successfully will help in the promotion of Structural Funds to improve the growth of existing firms and promote the growth of new ones. Currently proposed regulations are aimed at initiatives which help improve the regulatory impact assessment guidelines and cross governmental initiatives. These will help enable reduction of existing administrative costs for the different companies (European committee report 2008). This section further strengthens the importance given to micro and macro factors influencing the fostering of high growth firm. The importance given to the development of entrepreneurs who have the ability to foster more high impact firms has been identified by the government. 4.3.4. Regulatory framework as a driver for high growth firms: All market economies have the requirement of a regulatory framework. Regulation plays an important role in ensuring the efficient functioning of markets. Good regulation will prevent market failures, promote healthy competition and has a role in protecting workers and consumers (Owen 2004). Obtaining a clear and concise regulatory framework is essential for strong productivity growth. It is therefore essential that the Government delivers a regulatory framework which promotes competition, innovation, investment and supports the formation of skills in the labour market. All these in turn can lead to the promotion of high growth firms (Owen 2004). The UK regulatory environment has been consistently recognized as amongst the best in the world. The World Bank ranks the UK 6th overall out of 178 economies in terms of ease of doing business. The UK is ranked second amongst G7 members and second among European Member States (World Bank 2008). Figure 7: World Bank Report Source World Bank 2008 The OECD ranks the UK second overall, and first in the G7, based on the availability of indicators in the product market. It also reported that the UK has the lowest barriers to entrepreneurship in all OECD countries (OECD, 2007). All of these factors indicate that the regulatory framework is well established and promotes the productivity of the existing firms. The following regulatory frameworks have been proposed for the improvement of regulatory framework with regard to high growth firms: © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 36 of 49

37. The government of UK has introduced a new approach to regulating small growing firms in line with its “think small first” policy. The government has taken measures to examine whether these small firms can be fully exempted from new regulatory requirements or need to be subjected to a simplification of enforcement. The government had also review existing legislation to ensure the Hampton principles have been followed. They enable identification and delivery of new or increased exemptions for high growing firms (HM Treasury, BERR, 2008). The global economy is becoming more competitive. Many formerly heavily regulated countries are following the UK’s lead and simplifying and eliminating regulation. While this presents opportunities for UK businesses in terms of new markets and access to new consumers, it also presents challenges. To remain competitive it is clear that the UK must keep its regulatory burden as light as possible and has taken up the following measures to promote growth in its companies (HM Treasury, BERR, 2008). The Government has taken an initiative to set a target for reducing administrative burdens by 25 per cent by 2010 . This can help increase GDP by 0.9%. (Gelauf et al., 2002) Research into the macroeconomic impacts of regulation suggests that reform of regulation of product markets is positively correlated with total factor productivity growth, with the strongest impact from reforming administrative burdens (Nicolleti et al., 2003)  Other research found a strong negative association between regulation and growth although this relationship is less strongly negative if the quality of institutions improves (Loyaza et al., 2005). These reforms and regulatory frameworks in the currently existing macroeconomic and microeconomic policy proposed by the UK government have played a role in improving the country’s productivity performance over the last decade. Trend productivity growth which gives the output per hour worked is estimated to have increased from 1.9% per annum over the previous two cycles, to 2.4% in the current cycle (Budget 2008) as depicted in the chart below. This has supported the narrowing of the productivity gap between the UK and other countries which have been the main industrial competitors Figure 7: Output of work per hour: © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 37 of 49

38. Source: HM treasury, BERR Report, 2008. However more progress is required in order to further close the gap with other economies. This can be promoted by improvement of the current existing policies and regulatory frameworks to increase the number of high growth firms in the country. 4.3.5. Proposed implications for policymakers to foster growth of high impact firms: The previous section in this analysis has clearly shown that the significant growth is seen in this section. The following thoughts are to be kept in mind while framing policies with regard to high growth firms as indicated in NESTA ( October 2009a) report: Focus on the firms with the potential for significant growth There have been numerous small firms which have been successfully nurtured over the last few years in the UK. Policymakers till date have traditionally focused on the existing number rather than the quality of small firms. In order to achieve greater economic prosperity and higher rates of employment there is a need to focus on those firms with the greatest potential to grow (NESTA 2009a). Promote existing firms Young firms are more likely to grow fast however there is a chance that only a very small proportion of new firms succeed in achieving high-growth status. A number of mature firms today constitute a large proportion of high growth firms. Policy makers should keep in mind that giving support for small and medium sized firms would probably enable their growth. And this support can be extended to all those firms which have demonstrated some capacity or ambition to grow, regardless of their age (NESTA 2009b). Encourage innovation It is not only important to promote innovation, but it is also critical that there is enough financial capital available to enhance the existing innovative measures. The links between innovation and growth suggest that supporting innovation is a crucial channel to foster business growth. These reasons indicate that it is important to continue improving the availability of finance for growing innovative firms (NESTA 2009b). According to the realist research approach as adopted in the research methodology, the policy implications of the above findings have been discussed after a qualitative analysis. It is important to note that this discussion provided is suggestive and subjective to some assumptions made based on previously available literature. The significant contributions made by high growth firms to the economy possible benefits to the economy can be identified. The views of Acs has been indicated in the review of literature and has clearly shown that the importance of public policies and regulation in developing high impact entrepreneurship. As Hahn (1988) has indicated it can be seen that government intervention is justified when there is fostering the growth of the economy. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 38 of 49

39. 4.4. Conclusion: This chapter has presented the findings of this research in relation to the following details: 1.Quantitative analysis: The main factors which have a distinctive influence on the growth of high impact firms including finance, employment, sectorial distribution and location have been discussed. 2.Qualitative analysis: The different policy implications which influence this structural analysis have been analyzed. The next chapter provides an overall summary as well as the recommendations and limitations. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 39 of 49

40. 5.0. Summary and Recommendations: 5.1. Introduction: In this chapter a summary of the analysis along with different measures to promote fostering of high impact firm which have been born out of the previous chapter have been discussed. The limitations of the study and ideas and recommendations for future research have also been highlighted. 5.2. Summary: This entire dissertation had discussed in depth the field of high impact firms while highlighting the importance of political as well as regulatory attention which is required by these firms. However it has also been observed that thee relative rarity of high-growth firms in the current UK economy is common across the developed economies. Therefore it is an important task to find ways to foster growth of more high impact firms. There have been a number of researchers who have indicated that it is impossible to identify the measures to foster their growth. One of most strong views was expressed by Hakim (1989) who indicated that the distinctive features of fast growth firms, involves a selective policy of support for small firms which is defined to be unworkable as they do not provide operational grounds, either at the start up stage or the later stage when the company has grown and expanded into a sizeable firm. However over the period of years distinctive research reports by BERR and NESTA has used a number of methods to indicate the current situation of high impact firms. Buss (2002) has indicated that there is a need for tailor made policies to foster the growth of high impact firms in booming sectors. It has also been discovered by NESTA Report (2009 a) that in the UK growth of high growth firms has been tremendous in the last five years. Brophy (1996) and Cameron and Muellbauer(1996) have discovered the following salient features with regard to high impact firms: High impact firms are found to have a much lower failure rate than other firms. High impact firms are found to create more wealth in the form of profit, sales or value. High impact firms are also likely to export products as well as services. High impact firms also lead the way in production, innovation as well as job creation. This research report has revisited some of the important conclusions concurred with regard to high impact firms conducted by a number of previous authors. This report specifically has tried to give a picture of the factors which have the most influence on fostering high impact firms and has considered different policy initiatives required to foster the growth of these firms. Governments need to have strategies which focus on an economic development platform. Therefore this dissertation report has influence on the measures to foster growth of high impact firms specially with regard to improving employment rate and promotion of entrepreneurs. The following are the key questions answered in this research: 1.What characteristics of firm growth influence further fostering of high impact firms? 2.What are the policy measures adopted in order to foster high impact firm growth? Throughout this report it has been established that the individual entrepreneurial features have a strong impact on business ambitions and growth. This should be the focus of the government ad they try to nurture these features by directing timely policies. During challenging times of the economy, like the © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 40 of 49

41. current situation where the world is trying to get over the subprime crisis of the dollar, it is important that a specific actionable plan is established in order to foster growth of high impact firms which in turn will lead to increase in productivity, employment creation as well as wealth creation. There are many implications suggested in the NESTA report (2009) and BERR (2008) findings. They have indicated that there should be a shift to include all industries in the sectorial composition of high impact firms. There is also the key impact of finance where reports on company compiled by venture capitalists should be made available and accessible to the public to create an efficient market and also promote more business “angel” investors. Overall the research has highlighted that there is need for distinctive policies and regulatory frameworks to foster more high impact firms rather than the growing dependence on minority super growth firms termed as the gazelles. 5.3. Limitations of the study and reflective criticism: One of the main limitations of this study is that it involves a distinctive qualitative approach along with the quantitative analysis. This is a corpus analysis and the conclusions arrived at cannot be extended to wider circles with the same level of confidence as quantitative analyses. This is because the conclusions of the research are not investigated to ascertain whether they are statistically significant when applied globally. Another limitation of this research is that any conclusion arrived at is subjective, and cannot be thought of as conclusive. All the thoughts reflected in this study represent the thoughts of the researcher and can in no way be established as a conclusive analysis of the existing conditions of the high impact firms in UK. Adopting a realist approach this research has believed from the beginning that the knowledge acquired about a certain field can give us an idea of the policies that are required to be implemented. Following this path the research has adopted a cheerful and optimistic outlook assuming that the data available through secondary methods are accurate. This is just a supposition and a limitation because a first analysis of the presence of high impact firms has not been carried out. Users of this research should also bear in mind that the data used has been during the period of 2005- 2008. Since then a lot of changes have occurred and this may influence the results and analysis of the findings of this report. There are a number of policies which are being framed in order to foster high impact firms even as this report is being composed. Therefore this report has not considered their implementations and consequences. 5.4. Recommendations for further study: A number of ideas come to mind while recommending further research: A detailed analysis of the impact of entrepreneurs on organization and the political course of action to be addressed in order to promote more entrepreneurs. An analysis of the influence of capital market on fostering the growth of high impact firms. Comparison of the UK firms with those worldwide, including developing countries like India and China will provide a broader view. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 41 of 49

42.  An analysis of the determinants of the prevalence of Start-ups which influence fostering of High- Growth Firms 5.5. Conclusion: This research had set out to follow the importance of high impact firms and various measures to fostering their growth. A broad range of topics have been converged in this research and the overall objective achieved is based on the availability of theoretical literature. The research explanations arrived at is only provisional and inclusive and is in no way exhaustive and conclusive. © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 42 of 49

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49. World Bank 2008, Doing Business in 2008, available at: http://www.doingbusiness.org/documents/FullReport/2008/DB08_Full_Report.pdf © 2016-2017 All Rights Reserved, No part of this document should be modified/used without prior consent Tutors India™ - Your trusted mentor since 2001 www.tutorindia.com I UK # +44-1143520021, Info@tutorsindia.com Page 49 of 49