Small groups of fast-growth firms contribute disproportionately to job creation, yet little is known about their broader impact on the economy. This paper provides the first evidence of the agglomeration externalities of fast-growth firms, examining their economic impact on non-fast-growth firms operating within the same region (NUTS-2) and industry (SIC2), and through backward and forward linkages. Using comprehensive firm-level data on UK firms between 1997 and 2013, the analysis shows robust evidence of positive spillovers of fast-growth firms on the labour productivity of non-fast-growth firms in the same industry and region. However, the externalities in relation to the employment growth of non-fast-growth firms are negative, suggesting labour poaching and local competition effects.
Bibliographical note© 2020 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted
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Funding: The study was funded by the UK Economic and Social
Research Council (ESRC) [grant number ES/R010129/
5]; the Department for Business, Energy & Industrial
Strategy; Innovate UK; and the British Business Bank
through the UK Enterprise Research Centre (ERC).
- fast growth
- firm heterogeneity