Only six per cent of UK businesses are responsible for the majority of job creation and prosperity, according the National Endowment for Science, Technology and the Arts (NESTA).
The figure has been based on two reports commissioned by the organisation mapping the UK’s high-growth businesses. The reports revealed that just 11,500 businesses with 10 or more employees fell into the ‘high-growth’ category.
Over a period of almost a decade, these companies generated 54 per cent of new jobs in the UK. Around 70 per cent of the firms were at least five years old and a common trait among all of them was a high level of innovation.
The reports showed that the companies were spread across a variety of sectors. All major UK sectors contained between four and 10 per cent of high-growth firms with the companies equally present in the high-tech and low-tech sectors.
The sectors with the highest proportion of high-growth firms were financial services, real estate and business services, while the lowest was found in manufacturing with a share of only three to four per cent.
The geographical location of the these ‘super companies’ was shown to be spread throughout the UK. The North West, Scotland and the east of England revealed a particularly high share of high-growth firms.
However, these variations changed over time, with Wales revealing the highest share of high-growth firms in 2002-2005, while Scotland had the most from 2005-2008.
Throughout the period, around a third of the companies were located in Greater London and the South East.
In addition, the reports found that the UK had one of the largest shares of high-growth firms among the Organisation for Economic Cooperation and Development (OECD) member countries in 2002-2005, and is ahead of the US in terms of proportion of growth firms in certain sectors.
Jonathan Kestenbaum, NESTA’s chief executive, said: ‘This research has significant implications for the direction of economic policy. It shows that enabling innovation is good for growth. Just as importantly, it shows that focusing attention on growing businesses and promoting excellence, far from being an elitist policy, gives rise to widespread job creation and prosperity.’
The reports are due to be followed by a series of studies by NESTA, analysing the catalysts for innovation and the actions that the government can take to further encourage growth.