Top 1% of entrepreneurs create 40% of jobs?

A report suggests a very small number of companies create a huge proportion of new jobs. Should the Government change its growth strategy accordingly?

by Emma Haslett
Last Updated: 04 Jul 2011
We’ve been hearing for quite some time that entrepreneurs are the key to creating growth and lifting the economy out of its troubles. But a new report illustrates just how important our top entrepreneurs are: according to a study by the World Economic Forum, the top 1% are responsible for creating 40% of jobs. That’s a far larger proportion than previously thought. The WEF reckons the Government might have a thing or two to learn from the businesses concerned - and they might also help teach other businesses how to be successful.

The snappily-titled Global Entrepreneurship and Successful Growth Strategies of Early-Stage Companies Report (gasp) surveyed 380,000 companies in 10 countries, and identified a number of attributes successful companies tend to have in common. For instance, businesses that do well often experience a ‘dark moment’, like losing an important client, running into financial difficulties or failed research projects, early on in their lives. It also reckons 42% of firms that are now flourishing have experienced a pronounced pattern in their lifecycle, which the WEF calls a ‘ladders and snakes growth path’. That means they experience speedy revenue growth in the first two to five years, which then halts abruptly and begins to reverse.

The WEF says Governments should use these findings to help nurture entrepreneurship; the theory is that by understanding what kind of ‘economic, social and political environment benefits these companies’, they might be able to reproduce them more often.

It also argues that ‘copying Silicon Valley may be less effective than understanding the local elite few in their own ecosystem’. So projects like the Governments ‘Tech City’, a hub for technology entrepreneurs due to open in the Olympic Park site after the games are over, might not be quite as effective as originally hoped. Which, considering the Government has already pledged £1m towards the project, may well go down like a lead balloon at the Treasury...

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