STUDY | Fast-growing businesses – not just in cities

Fast-growing companies, known as gazelles, are often associated with big cities and dense business clusters. But a new Finnish study shows that growth is more dispersed than that.

Finland is one of Europe’s most sparsely populated countries. At the same time, the country has a high proportion of fast-growing companies. This makes the country particularly interesting for studying how gazelles are created and distributed geographically. In a recent study, researchers have mapped this type of company in Finland during the period 2015-2021, and analyzed how they are distributed between different types of regions.

Gazelles also in rural areas

The study shows that gazelles are not just an urban phenomenon. While cities have the greatest capacity to produce high-growth firms, smaller towns also contribute. Rural regions close to cities and areas with some urban structure have a moderate share of gazelles per inhabitant. The most sparsely populated parts of the country have the lowest share, but no region is completely without them. Fast-growing companies can be found all over Finland and in almost every sector – from construction and programming to trade, transport, manufacturing and agriculture.

Variations between regions are linked to factors such as education levels and the age of the population. Structural differences affect which geographical areas are able to create fast-growing businesses.

The study provides a more nuanced picture of Finnish business – and suggests that opportunities for growth can exist even where resources are limited.

New definition and methodology

What makes the study unique is that it includes micro-enterprises – companies with fewer than 10 employees and an annual turnover of less than €2 million. Previous research has often focused on larger companies, despite the fact that micro-enterprises make up the majority of all businesses. To highlight their growth potential, the researchers developed a new, turnover-based definition of gazelles.

It is based on turnover rather than number of employees and combines both relative and absolute growth. The threshold for micro-enterprises is set at an increase of at least €700 000 in turnover over the period studied. The new methodology provides a more nuanced picture of where growth is taking place, say the researchers.

More about the article and the authors
The article Tracking spatial distribution and regional characteristics of gazelles is published in the scientific journal Entrepreneurship & Regional Development. The authors are Pauliina Björk, Martti Saarela, Ossi Kotavaara and Matti Muhos, all from the University of Oulu, Finland.