Defining high growth/ high impact entrepreneurship

entrepreneurship-lighbulb(1)A widely accepted definition of high growth entrepreneurs identifies these enterprises as exhibiting an average annual growth (number of employees or by turnover) greater than 20% over a 3 year period[1]. Based on this definition, the Organization for Economic Cooperation and Development (OECD) found that high growth firms constitute between 3% and 6% of all firms.

Another definition for high impact companies introduced in 2011 takes into account a firm’s sales and employment growth[2]. High-impact companies showed sales that at least double over a 4 year period and an employment growth quantifier (product of its absolute and percentage employment change) of at least two.

However, both these definitions require large amounts of firm level, longitudinal data that is difficult to operationalize across multiple countries and regions.  A 2011 Ernst and Young study of entrepreneurship in 60 countries found that only 3 out of every 1,000 respondents achieved high growth[3]. These high impact entrepreneurs were defined in terms of their growth aspirations: as those entrepreneurs who intend to increase their number of employees fivefold in the next 5 years. They also exhibited certain identifiable characteristics: They tended to be college educated and had internationally-oriented businesses. The study was based on Global Entrepreneurship Monitor (GEM) data.

In 2015 the Global Women Entrepreneur Leaders Scorecard adapted the parameters introduced by the 2011 Ernst and Young study to specifically identify high impact women entrepreneurs.  The Scorecard defined high impact women entrepreneurs as those who exhibit characteristics associated with high growth outcomes but which may currently be aspirational rather than already achieved[4]. The 3 criteria used included: college educated women entrepreneurs, women entrepreneurs that have a  market-expanding, innovative businesses and are intending to employ at least 10 people and plan to grow more than 50% in 5 years. Market expanding, innovative businesses are identified as the percentage of women entrepreneurs with more than 1% of customers outside of the home country.

 

Sources:

[1]OECD (2007). Eurostat-OECD Manual on Business Demography Statistics, Paris: OECD.

[2] Tracy, S. (2011). Accelerating Job Creation in America: The Promise of High Impact Companies, Research report commissioned by the U.S. Small Business Administration, No. 381

[3] Morris, R. (2012). ‘The 2011 High-impact Entrepreneurship Global Report’, sponsored by Ernst and Young, Endeavor, and the Global Entrepreneurship Monitor

[4] Aidis, R., Weeks, J. and Anacker, K. (2015), The Global Women Entrepreneur Leaders Scorecard 2015: Data and Methodology

 

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