Why do some SME's become high-growth firms? The role of employee competences

Abstract

Purpose High-growth firms generate a large share of new jobs and are thus the key drivers of innovation and industry dynamics. As the employees' education supports innovation and productivity, this article hypothesizes that employee competences explain high growth.

Design/methodology/approach The study approaches this by examining intangible capital and specialized knowledge to evaluate how these characteristics support the probability of becoming a high-growth firm. The estimation uses linked employer–employee data from Danish registers from 2005 to 2013.

Findings As the authors measure high growth with the size-neutral Birch index, they can examine the determinants of high growth across different firm size classes. The findings imply that intangible capital relates positively to the firm's high growth.

Originality/value Previous research on high-growth firms is concentrated on the owners’ education. This article broadens to the high education of all employees and accounts for the employees’ occupation and capitalization of knowledge with intangible capital.