Seminar  |  15.03.2023 | 15:00  –  16:15

Innovation and Entrepreneurship Seminar: High Growth Firms in Germany and Business Dynamism

Enrico De Monte (ZEW)

Raum E10

Business dynamism, i.e., the process of new efficient firms entering the market, grow and force less efficient competitors to contract and exit, is believed to be key both for productivity and employment growth. A particular role in that take young high growth firms with the potential to fundamentally disrupt the economy. Business dynamism and firm high growth, however, are in decline in many advanced countries, most prominently shown for the US, which has important long term effects on the transformation process of the economy. Based on firm-level data, originating from Germany’s largest credit rating agency (Creditreform), covering the period 2002–2019, we show some new insights in firm high growth dynamics. By that, we look at secular trends, heterogeneity in terms of firm size and age as well as sectoral differences.

Taken this as background information, the presentation will proceed by introducing a larger research project that we are currently setting up jointly with IWH (Halle Institute for Economic Research). Here, a unique new data infrastructure, linking the above treated firm-level data with establishment and employee data from IAB will be developed and exploited. This new data infrastructure will allow to respond to several crucial questions in the literature of entrepreneurship, business dynamism, and firm high-growth. More precisely, the research agenda comprises the analysis of who creates jobs in Germany (small vs. big vs. young), as well as the investigation of the conditions (rural arears vs. economic centres, IT infrastructure, closeness to scientific institutions) spurring firm high growth and regional development. Furthermore, we ask the question of the role of entrepreneur characteristics to high growth firm outcomes, such as age, experience, education and migrant status, and the role of inventors and workers. Lastly, the project also comprises the analysis of the effect of M&A activity on firm growth and the innovativeness of the economy.

Ansprechpartner: Albert Roger

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