SMEs are now viewed as a major force in job creation and innovation policy. In particular, the start-up seen has had a lot of attention to what is known as ‘gazelles’ or high growth firms (HGFs).
While representing only around 6 per cent of all business, HGF create around 50 per cent of all new jobs (OECD, 2014). This is because HGF’s have identified a market opportunity and tend to be ’first-movers’ in responding to or changing customer demands (i.e. innovation of new products). For this reason, HGF are “thought to drive productivity growth, create new employment, increase innovation and promote business internationalization” (OECD, 2014).
HGF are also important because they pop up in all sorts of diverse geographical areas, responding to local challenges and opportunities. They also encourage further spin-offs their industry and stimulate wider entrepreneurial activity (Fetsch, 2016).
|High Growth Firm: There is no single definition of a HGF and what constitutes an extraordinary growth rate. However, most agree that a firm that is able to increases its revenues by at least 20 per cent annually for three years or more is considered high growth (Financial Times, N.D.; Investopdeia, N.D; OECD, 2012)|
Research from the UK found that the majority of these HGFs have less than 50 employees but were relatively established in the market and over five years old. These firms were also found in all industry sectors (e.g. food, health), not just the technology sector (OECD, 2014).
Given the economic benefits of HGFs, it is now recognised that it is important for governments to understand how these firms are established, what drives them and ways to encourage more business growth. To do this, there needs to be a greater focus on support for growth-oriented entrepreneurship, and economic gardening is one tactical approach that could support the establishment of HGFs locally.
|Economic gardening: “is an entrepreneurial approach to economic development that seeks to grow the local economy from within. Its premise is that local entrepreneurs create the companies that bring new wealth and economic growth to a region in the form of jobs, increased revenues, and a vibrant local business sector. Economic gardening seeks to focus on growing and nurturing local businesses rather than hunting for “big game” outside the area (ICMA, 2010)”.|
Economic Gardening is different traditional types of business assistance as services such as business planning, accounting or workforce development. Instead it about supporting growth firm and letting business owners know how important they are to their community (ICMA, 2010).
The Edward Lowe Foundation (2017) notes that economic gardening is about supporting businesses to:
- build market intelligence such as trend analysis and new resources;
- Identify and understand new and existing markets;
- Raise the visibility of the business through modern advertising such as search engine results and blogs and online communities;
- To uses the same mechanisms to gain feedback on their products, customers and competitors;
- Refine strategy to build a competitive advantage and sustainable mechanisms to retain it; and
- Build the capability leadership and management team development.