Growth Companies and Business Dynamics: A Finland–USA Comparison

Abstract

High-growth firms are a hallmark of an economy’s innovativeness and the functioning of its financial markets, as they are capable of rapidly creating high-productivity jobs. Strong economic growth emerges when firms that have succeeded in research and development are able to scale up quickly, despite the substantial uncertainty and financing challenges involved.

This analysis examines organic job creation and destruction of firms leveraging on establishment-level information. A high-growth firm is defined as a firm whose employment increases organically by a factor of 2.3 within one year. The comparison is based on a replication of a U.S. study (Kim et al. 2025) using Finnish data from Statistics Finland.

Key findings:

• In Finland, job creation and job destruction rates during the 2010s have been higher than in the United States, indicating a high degree of job reallocation.
• In Finland, the employment shares of rapidly growing high-growth firms and rapidly contracting firms have increased, whereas in the United States they have declined.
• High-growth firms are particularly important among young firms (aged 1–5 years). In Finland, their employment share increased sharply in the latter half of the 2010s and exceeded the level observed in the United States.
• Job creation is not primarily driven by small or medium-sized firms per se, but by young firms, which are often small in size.

In conclusion, the large and growing share of high-growth firms in total employment in the Finnish business sector points to successful innovation activity and relatively well-functioning financial markets. The rapid renewal of firm structures supports the view that there are well-founded reasons for cautious optimism regarding Finland’s economic growth prospects in the 2020s.

• ISSN: 2954-2618 (Online)
• ISBN: 978-952-209-234-2 (Online)
• JEL: D22, J21, L25, O31, G24
• Publication in PDF-format