Regional variations in new firm job creation: The contribution of high growth start-ups

Abstract

Much existing work argues that a small number of high growth start-ups create the majority of new firm jobs; that policies aiming to increase the volume (i.e. number) of start-ups in the UK’s less entrepreneurial regions may adversely affect their growth or quality; and, therefore, policy should target high growth new starts. To test these arguments, a database of all UK independent limited companies set up between 2001 and 2005 still operating in 2008 was constructed and analysed. In 2008 there were 351,000 such start-ups with 1.51 m employees. Defining high growth as firms with over 24 employees in 2008, high growth start-ups did not create the majority of new firm jobs and the ‘job creation problem’ in the UK’s less entrepreneurial regions is too few start-ups rather than a relative absence of high growth start-ups. Consequently, in the UK’s less entrepreneurial regions policy should aim to increase the volume of start-ups.