Regional incidence and persistence of high-growth firms: testing ideas from the entrepreneurial ecosystems literature

Abstract

Policymakers and scholars often assume that a higher incidence of high-growth firms (HGFs) is synonymous with vibrant regional economic dynamics, and that HGF shares are persistent over time as entrepreneurial ecosystems (EEs) have slowly changing features. In this paper we test these hypotheses, which are deeply rooted in the EE literature. Results do not provide strong support for the hypothesis that more developed regions feature higher HGF shares. We do find evidence consistent with HGF shares displaying persistency over time. However, we show that more developed regions do not have higher persistence in their HGF shares, and that the strength in persistence does not increase across the HGFs distribution, which does not support path-dependency as the main mechanism behind the observed persistence. Overall, we call for a more nuanced interpretation of both regional HGF shares and the EEs literature.