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Competencies and Institutions Fostering High-Growth Firms

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Dan Johansson

affiliation not provided to SSRN

July 4, 2008

IFN Working Paper No. 757

High-growth firms (HGFs) are critical for net job creation and economic growth. We analyze HGFs using the theory of competence blocs, linking firm growth to property rights and the interaction of complementary expertise. Specifically, we discuss how the institutional framework affects the prevalence and performance of HGFs. Firm growth is viewed as resulting from the perpetual discovery and use of productive knowledge. A key element in this process is the competence bloc, a nexus of economic actors with complementary competencies that are vital in order to generate and commercialize novel ideas. The institutional framework determines the incentives for these individuals to acquire and utilize knowledge. We identify a number of institutions that foster the emergence of competence blocs and the creation of HGFs. In particular, our analysis points to the pivotal roles played by tax structures, labor market regulation, and the contestability of currently closed service markets. Finally, we characterize institutions beneficial for sclerotic or dynamic capitalism, respectively, depending on whether they provide a favorable environment for the emergence of competence blocs and the creation of HGFs.

Number of Pages in PDF File: 61

Keywords: Competence bloc, Dynamic capitalism, Entrepreneurship, Flyers, Gazelles, High-growth firms, Industrial policy, Innovation, Institutions, Labor security, Product market regulations, Property rights, Self-employment, Tax policy

JEL Classification: H32, L5, L25, M13, O31, P14

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Date posted: July 7, 2008 ; Last revised: September 29, 2013

Suggested Citation

Henrekson, Magnus and Johansson, Dan, Competencies and Institutions Fostering High-Growth Firms (July 4, 2008). IFN Working Paper No. 757. Available at SSRN: http://ssrn.com/abstract=1155480 or http://dx.doi.org/10.2139/ssrn.1155480

Contact Information

Magnus Henrekson (Contact Author)
Research Institute of Industrial Economics (IFN) ( email )
P.O. Box 55665
Grevgatan 34
Stockholm, SE-10215
+46-8-6654502 (Phone)
+46-8-6654599 (Fax)
HOME PAGE: http://www.ifn.se/mh
Dan Johansson
affiliation not provided to SSRN ( email )
No Address Available
Feedback to SSRN

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