#187. High-Impact Firms -The Gazelles Revisited

Posted on | The Agurban
High-Impact Firms -The Gazelles Revisited

David Birch first popularized the term “gazelle firms”, referring to the fast growing firms that can often transform a community and region. Birch’s work was primarily focused upon sales growth. A recent study by the SBA has expanded his work to include expanding employment in addition to sales growth in determining which firms are the most desirable.

Their key finding was, “High-impact firms are relatively old, rare and contribute to the majority of overall economic growth. On average they are 25 years old, they represent between 2 and 3 percent of all firms, and they account for almost all of the private sector employment and revenue growth in the economy.”

WOW! Read the preceding paragraph again!

High-impact firms exist in all industries. We can see why a diversified economy grows more rapidly than one that is less diversified. The industries that are rapidly growing, which are led by high-impact firms, seem to shift over time. Encouraging diversity as a policy seems to make much more sense than targeting select industries.

As with most studies like this rural areas show very well. The states with the highest percentage of high- impact firms were AL, AZ, WY, SC and ND, all fairly rural. The lowest were: NY, KY, GA, CN and MS, mostly urban.

Twenty-three percent of all of the high impact firms in the country are located in rural areas. You have to go out ten miles from the central business district in urban areas to get to the same percentage. Obviously the urban core isn’t generating as many high-impact firms as we are in rural America.

Are you doing anything to encourage and grow the high-impact firms in your community?

For the complete study, visitĀ High-Impact Firms: Gazelles Revisited.