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Research article - Peer-reviewed, 2021

Getting the facts right on born globals

Ferguson, Shon; Henrekson, Magnus; Johannesson, Louise

Abstract

Policymakers in several countries have recently taken steps to promote the rapid export expansion of small- and medium-sized enterprises (SMEs). The goal of these policies has been to create successful export-intensive startups, which are often referred to as born globals. These measures are motivated by studies claiming that born global firms are disproportionately important for job creation and economic growth. Using detailed register data on the universe of Swedish manufacturing startups founded 1998–2014, we find that born globals are a very small group of firms whose long-run size and growth do not outperform other exporting firms. We also show that removing continuing firms and spinouts from the analysis is crucial for obtaining correct results. Thus, the notion that born globals are superior to firms that follow a more gradual internationalization process, a conclusion largely based on case studies and surveys, does not withstand scrutiny. Policymakers must therefore be aware that encouraging more born globals need not necessarily lead to large benefits for the overall economy, especially in terms of employment.

Keywords

Born globals; Exporting; Firm growth; Globalization; Job creation

Published in

Small Business Economics
2021, volume: 56, number: 1, pages: 259-276

Authors' information

Research Institute of Industrial Economics
Swedish University of Agricultural Sciences, Department of Economics
Henrekson, Magnus
Research Institute of Industrial Economics
Johannesson, Louise
Research Institute of Industrial Economics

Sustainable Development Goals

SDG8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

UKÄ Subject classification

Economics

Publication Identifiers

DOI: https://doi.org/10.1007/s11187-019-00216-y

URI (permanent link to this page)

https://res.slu.se/id/publ/101561