Cities on your marks, get set, grow
Authors: Chris Brown
04 May 2011
High Growth Firms have been identified as key to the UK’s recovery, providing the economic and employment boost that is needed to drive the country away from the doom and gloom of the recession. However, research by NESTA has shown that there are a small number of high growth firms in the UK, with only six per cent of firms dominating employment growth. This needs to be expanded.
Our recent Cities 2020 summary report provides another view outlining the opportunities and barriers that shroud current and potential UK high growth firms and also what needs to be done to ensure a wider spectrum of organisations are achieving their potential as high growth.
Our full report released last month, Ready, Steady, Grow? How the government can support the development of more high growth firms, provided a detailed analysis of the role of high growth firms and what the government can do to ensure a positive pro-growth agenda. The summary provides both an overview of the report but also a more specific look at the future of high growth firms in the UK and particularly the role of cities in driving such growth.
High growth firms and cities are intrinsically related to each other. Cities provide the environment and resources for them to thrive, while high growth firms provide the boost to the cities’ local economy and demographic. But the barriers to firms achieving a high growth status are also an inherently local matter requiring a local solution.
The research highlighted a number of conclusions that need to be considered in order to realise the potential of high growth firms in the UK:
- high growth firms can be in any sector;
- high growth is temporary;
- firms old and new can be high growth;
- high growth firms tend to be innovative and;
- high growth firms are and can be geographically diverse.
Although these are considered in greater detail in the report, these conclusions provide a double edged sword in that high growth firms are likely being harboured throughout the UK but all the while the specific whereabouts of potential high growth firms is unknown nationally, regionally and locally. However, the need to encourage and support high growth firms will be important to ensure a nationwide growth as they provide diffusive processes for productivity, innovation and employment. The barriers to this occurring though are also prevalent.
In order to drive high growth, firms need to have strong leadership and management, a quality that can often be lost in very small start up companies, and is a problem further exacerbated by acute recruitment and skills training needs. There are also wider issues relating to access to finance capital and the availability of flexible accommodation for rapidly growing firms.
What we outline in our summary report is that the key to driving high growth firms is removing these barriers. This will require local action and delivery but with direction from national policymakers. Support and provision at the local level will allow for the identification of existing or new firms that can have the potential to achieve high growth – the UK is on its marks, now we need to get set and grow!
Chris Brown is a researcher on our Cities 2020 programme.
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