Innovation processes and the
formation of rapid-growth
firms
Is the Eirik
regional
Vatne level an important arena?
Department of Economics
Norwegian School of Economics and Business
Administration
Innovation and regional policy


Advance formation of enterprises that will
flourish and grow and create solid job
opportunities in all regions
In high cost environments growth is
supposed to happen in firms focused on high
skills or capabilities, learning and innovation
Academic debates on growth firms,
innovation and location

Specifically focused on territorial environments
with fast growth companies



Business clusters/dynamic agglomerations
Science park/university environments and the
formation of new ventures in high tech industries:
Information and Communication Technology,
Biotechnology, Nanotechnology
Urban environments with fast development of
knowlegde intencive business services (KIBS)
Innovation - more than high tech



Radical or incremental new product
Radical or incremental new process
Introducing new organizational arrangement


Knowledge system, management structure,
interorganizational arrangement
Introducing new market arrangement

Design/packaging, market channel, market
segment, internationalization
Community Innovation Survey (CIS)
Rapid-growth firms








Most surviving new firms will never grow to an enterprise with
> 20 employees (typical finding: 70 % of population)
Only a few firms will be classified as “fast flyers”, “expanders”
or “gazelles” (typical findings: 2-4 %)
These are often based on entrepreneurship, specific skills
and capabilities, and innovative activities
Phases of growth are unevenly distributed during the life
span of a firm
Some are new, entrepreneurial firms, others existing
enterprises with a strategic renewal of some sort
Some grow fast in expanding markets, others caused by
unique capabilities and increased market shares
Many rapid-growth firms still find a market in traditional
industries
Rapid-growth firms are territorially more evenly distributed
than firms in “new” industries
Gaseller
Nyetableringer
AS/ASA
Fylke
Alle foretak
M
17
.
r-T
rø
n
om
s.
or
d
dl
.
or
dTr
øn
dl
18
.
N
or
dl
an
d
19
Tr
om
s
20
Fi
nn
m
ar
k
N
Sø
ør
e&
R
&F
j
d
nd
er
er
la
n
al
a
or
da
gn
H
So
16
15
14
12
og
ld
ar
k
st
-A
gd
R
Ve
le
m
st
fo
er
ud
nd
st
-A
gd
Te
Au
11
10
09
08
sk
Ve
Bu
07
06
slo
m
ar
k
O
pp
la
ed
O
H
03
us
st
fo
ld
er
sh
Ø
Ak
05
04
02
01
Prosent
Regional distribution of gazelles, new ventures and firms
- by county. Shares of national numbers of firms, 2007
0.25
0.2
0.15
0.1
0.05
0
Innovative foretak
Nyetableringsrate
Fylke
Gasellerate
M
17
.
r-T
rø
n
om
s.
or
d
dl
.
or
dTr
øn
dl
18
.
N
or
dl
an
d
19
Tr
om
s
20
Fi
nn
m
ar
k
N
Sø
ør
e&
R
&F
j
d
nd
er
er
la
n
al
a
or
da
gn
H
So
16
15
14
12
og
ld
ar
k
st
-A
gd
R
Ve
le
m
st
fo
st
-A
gd
Te
Au
11
10
09
08
nd
er
ud
sk
pp
la
Ve
Bu
O
slo
m
ar
k
O
us
st
fo
ld
ed
03
H
07
06
Ø
Ak
er
sh
05
04
02
01
Prosent
Innovative firms, new ventures and gazelles-share of county total
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Fylke
M
17
.
r-T
rø
n
om
s.
or
d
dl
.
or
dTr
øn
dl
.
18
N
or
dl
an
d
19
Tr
om
s
20
Fi
nn
m
ar
k
N
Sø
ør
e&
R
&F
j
d
nd
er
er
la
n
al
a
or
da
gn
H
So
16
15
14
12
og
ld
ar
k
st
-A
gd
R
Ve
le
m
st
fo
st
-A
gd
Te
Au
11
10
09
08
sk
er
ud
nd
m
ar
k
slo
pp
la
Ve
Bu
O
ed
O
us
st
fo
ld
er
sh
03
H
07
06
Ø
Ak
05
04
02
01
Antall
Rapid-growth firm per 10.000 inhabitants - 2007
12
10
8
6
4
2
0
Rapid growth, entrepreneurship and
innovation

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
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Dependents on characteristics of founder/owner/manager, their
industrial and entrepreneurial experience, education, creativity
and social and professional network
A strategically focus on growth, risk taking, aggressive
competition and a leading performance
An ability to gather and process information more quickly
Develop deeper interorganizational relationships - networking
with more groups and more frequently
Focus on a narrow set of markets and customers - to create
value for customers
Achieved with superiority in product quality and unique innovative
capabilities
Training/developing staff and active us of incentives to involve
and sophisticate the firm’s human resources
Based on heterogeneous set of knowledge

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Unique understanding of the demand in specific markets –
understand your customers
Informed by and mastering the “newest” technologies in
specialised segments that add value to customers
Skills in hiring a competent staff and build a unique
achievement based and change oriented organization
Knowledge of how to communicate with the market
Unique understanding of the dynamics of the industry, the
competitors behaviour and own strategy
Unique capabilities in acquiring none traded knowledge
through networking
Competency and corporate entrepreneurship

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Innovation – to recognize opportunities
 Need domain-specific knowledge, cognitive ability, educationtraining-practical experience, and creativity
Brokering – to access and implement new information and
knowledge
 Exploring div. knowledge domains, learning from them, linking
knowledge from different domains to solve problems, and
implement ideas
Championing – extraordinary confidence in themselves and their
project
 Context specific, transformational leadership skills, ability to
influence and negotiate with others, use of informal networks
Sponsoring – accessing resources needed for venture
 Deep technological and business knowledge, risk tolerance,
persistence and passion, and transformational leadership skills
Where do these competencies thrive?



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In market or technology driven rapid-growth
firms?
In regional environments dominated by
specific industries?
In locales with a heterogeneous flow of
information, capabilities and capacities?
Are networking related to these
competencies dependent on proximity:
socially, territorial or both?