Comparison of firms births in different countries
How they are funded and how the tax system affects funding

Home > Business creation and employment > Where are French High Growth Firms?

Where are French High Growth Firms?

Friday 27 July 2012, by Nathalie DROAL

French unemployment can be explained with a comparison of gazelles’ creation figures. At comparable population, there are in France five times fewer creations than in the US and 2 to 3 fewer creations than in Germany or the United Kingdom. The tax system is directly responsible for this situation.

Where are French gazelles?

Comparison France - United States

The Kauffman Foundation made a study on the 1% and 5% highest growth firms in the US and their impact on job creation ( D. Stangler ; Mars 2010 ; « High growth firms and the future of the American economy » ; Ewing Marion Kauffman Foundation). This study showed that the 1% most dynamic companies generate 40% of the jobs created each year by existing companies (3,7 million in 2008) and that the 5% most dynamic ones generate two third of them.

The pH Group made as well a study on the 1% and 5% highest growth firms between 2007 and 2008. It showed that the top 1%, including 1 125 companies employing 34 000 people, created in one year about 50 000 more jobs, and that the top 5%, including 5 739 companies and employing 204 000 people, a hundred thousand. Given that the U.S. population is five times higher than French one, the American economy apparently produces 5 to 10 times more gazelles than France does.

Comparison France - United Kingdom

It clearly shows that High Growth Firms - as the OECD defines them- created 600 000 jobs in France versus 1 350 000 in the U.K. during the 2005-2008 period. This ratio is also true for gazelles, the High Growth Firms less than 5 years old.

Germany

For all categories above 2 employees, Germany creates twice more companies than France does, which corroborates previous OECD studies (Vale report).

Comparison of French and German business creations in 2008
Created firmsCreated jobs
Company sizeFrance AllemagneFrance Allemagne
1 employee 23 125 25 903 23 125 25 903
2-4 10 800 28 444 28 200 72 844
5-9 4 029 8 444 26 661 53 408
10+ 3 271 6 253 36 962 151 395
Total 41 225 69 044 114 948 30 355

Source: INSEE, Destatis

Speed of growth - Comparison between France and the UK

Equity capital varies depending on economic sectors but is in average proportional to employment. Comparison of companies whose equity capital doubled during the year is therefore a good way to measure the speed of growth.

To us, a gazelle is a company starting with a least 100 000 Euros of equity capital. It seemed to us it is the minimum an entrepreneur must gather if he has an ambitious project. The chart below shows employment evolution in this category of companies between 1994 and 2001.

Results may be a little old and the sample not large enough concerning the UK but they are consistent with previous studies.


Comment on this article

Site Map |