Fast-growing firms, product strategies and skills development

Nesta Working Paper 12/12
Issued: November 2012
JEL Classification: J24, L25
Keywords: Firm growth, skills, product strategy

Abstract

This paper draws on matched data from the National Employers Skill Survey (NESS) and the Business Structure Database (BSD) to examine the impact of workforce skills and training on firm growth. Firm growth in both employment and sales is found to be significantly positively related to the deployment of skill-intensive product strategies. In seeking to meet their skill requirements, fast-growing firms are found to engage in substantial training of their employees as well as searching for skilled workers on the open market. This substantial investment in training both precedes rapid growth and persists during the growth period (in spite of the high opportunity costs of providing training during working time when sales are growing rapidly). The assets and capabilities that firms require in order to be able to grow fast appear to equip them well to deal with the skills challenges that are part and parcel of rapid expansion.

Authors

Geoff Mason, Catherine Robinson, Chiara Rosazza Bondibene

The Nesta Working Paper Series is intended to make available early results of research undertaken or supported by Nesta and its partners in order to elicit comments and suggestions for revisions and to encourage discussion and further debate prior to publication (ISSN 2050-9820). The views expressed in this working paper are those of the author(s) and do not necessarily represent those of Nesta.