Using data from a number of studies, a team of researchers has found that a few rapidly growing firms—known as Gazelles—account for the lions’ share of new jobs.
The research team found that Gazelles exist in all industries and share three key characteristics:
- Gazelles grow rapidly. The Organization for Economic Cooperation and Development defines Gazelles as firms that maintain a 20% or more growth rate over a three year period. Gazelles also continue to grow in recessions.
- Gazelles are younger than other firms. All studies indicate that Gazelles are younger on average. Some Gazelle definitions require them to be less than five years old.
- Gazelles are smaller on average. Although most Gazelle firms are small, larger Gazelles, or “Super-Gazelles,” also substantially contribute to job creation. However, data suggests that age is a more important factor than size.
Evidence within the report confirms that Gazelles are disproportionately responsible for job creation. One study of Finnish Gazelles found that altogether, high-growth firms increased employment by 400% during the research period. From 1998-1992, 4% of all U.S. companies created 70% of all the new jobs.
These findings imply that, “an employment-enhancing policy should aim at lowering barriers to new firm entry and firm exit to support an experimental process increasing the number of trials (new firms) from which potential Gazelles can be recruited, and not hindering the closure of failures.”
For the full report by Magnus Henrekson and Dan Johansson, please click here.
Contributed by Caroline Pringle.