Belgian High-Growth Monitor Edition 2019
Total Page:16
File Type:pdf, Size:1020Kb
BELGIAN HIGH-GROWTH MONITOR WHO ARE BELGIUM’S FASTEST GROWING COMPANIES? EDITION 2019 YANNICK DILLEN PROF. HANS CRIJNS Report made by the Impulse Centre ‘Growth Management for Medium-sized Enterprises’ (iGMO) BELGIAN HIGH-GROWTH MONITOR 2019 TABLE OF CONTENTS Page 1 INTRODUCTION Page 3 HIGH-GROWTH FIRMS IN BELGIUM: THE STATE OF AFFAIRS Page 12 THE VOICE OF GROWTH ENTREPRENEURS Page 25 WHO ARE THESE HIGH-GROWTH FIRMS? Page 27 ABOUT THE RESPONDENTS AND THEIR FIRMS Page 29 THE VIEW OF THE AUTHORS Page 32 LIST OF EMPLOYMENT HGFs FOR THE PERIOD 2014-2017 ABOUT THE BELGIAN HIGH-GROWTH MONITOR The Belgian High-Growth Monitor is an annual initiative from the Impulse Centre ‘Growth Management for Medium-sized Enterprises’ (iGMO) of Vlerick Business School, in cooperation with EY and KBC. This report presents the state of affairs of Belgian high-growth firms by giving an overview of their profile and characteristics. In addition, it presents the results of a survey of Belgian growth entrepreneurs. ABOUT THE IMPULSE CENTRE ‘GROWTH MANAGEMENT’ (iGMO) The Impulse Centre ‘Growth Management for Medium-Sized Enterprises’ (iGMO) of Vlerick Business School is a platform for research, open dialogue and networking for owner-managers of growth-oriented SMEs. The Centre fits within the strategic mission of Vlerick Business School, which aims to stimulate entrepreneurship. Founded in 1993, iGMO currently has over 160 active member-entrepreneurs who periodically gather in research seminars, workshops and learning visits, both nationally and internationally. iGMO builds on the support of its prime foundation partners EY and KBC. OurThis report solution is based on to data your gathered specificfrom the Belfirst needs database of Bureau Van Dijk and on the analysis of survey results gathered from Belgian entrepreneurs. The conclusions and opinions of the authors of the report are not necessarily those of Vlerick Business School, EY or KBC. Copyright is held by Vlerick Business School and the report cannot be used without the permission of Vlerick Business School and the authors. Copyright © 2019 Vlerick Business School (Yannick Dillen & Hans Crijns). All rights reserved. INTRODUCTION High-growth firms (HGFs) are frequently described as the engine of the Belgian economy. They create the majority of new jobs and account for an enormous increase in the total added value that is realised by Belgian private firms. Therefore, it is crucial to learn more about the characteristics of these HGFs. Who are these Belgian high-growth firms? Do we find remarkable evolutions in their profiles? Answers to these questions may be vital for academics, policy makers and ambitious entrepreneurs. The Belgian High-Growth Monitor aims to provide these answers by analysing the subset of HGFs in Belgium for the most recent period and by surveying a group of Belgian growth entrepreneurs. HGFs are defined as companies that have achieved annual growth rates of at least 20 per cent per year in employees or added value, over a period of three years. Firms need to have had at least ten registered employees at the start of the analysed three-year period.1,2 Hence, micro-firms are excluded from the analysis. Our data were obtained from the Bel-first database of Bureau Van Dijk, which contains financial information for all Belgian firms for the period 2009- 2017.3 Number of employees and added value will be considered as growth measures. As a consequence, we will analyse two different subsets of high-growth firms. First, employment HGFs are defined as those that have realized high-growth in terms of full-time equivalent employees working for the company. Second, added value HGFs are defined as those that have experienced a period of rapid growth in terms of added value. Added value figures have important social implications, because the sum of all added value figures is a building block of the country’s domestic product. Hence, the two growth measures that are taken into account both have an impact — directly or indirectly — on the prosperity of a region, as strong employment growth entails job creation, and strong added value growth enables an increase in GDP. 1 The OECD definition of an HGF considers turnover instead of added value as a growth measure. In Belgium, however, most firms do not have an obligation to publish turnover figures. Hence, in our analysis, added value is chosen as an alternative growth measure as it makes up the difference between the total sales revenue and the total cost of components, materials, and services purchased from other firms within a certain period (usually one year). Belgian firms have an obligation to publish added value figures, which can be retrieved from section 9800 of their annual accounts. 2 Excluded from the analyses are firms without a lucrative purpose (in Dutch abbreviated as ‘V.Z.W.’, in French as ‘A.S.B.L.’) and public-sector companies. 3 Bureau Van Dijk, Bel-first: Financial Reports and Statistics On Belgian and Luxemburg Companies, https://www.bvdinfo.com/en-us/our-products/data/national/bel-first. 1 In our analysis, we will look for evidence if the net employment growth in Belgium is generated by a relatively small group of rapidly growing companies, the so-called ‘Gazelles’. According to Birch (1979) 4 these firms are generating most of the new net jobs in the economy. David Birch estimated that the gazelles, around 4% of the population of American firms, accounted for 70% of all new jobs. Next to these Gazelles stand on the one hand a group of large firms, called the ‘Elephants’, that created only few new jobs and on the other hand the ‘Mice’, the vast majority of all firms that aim to remain small and contribute only marginally to employment growth. A ‘Gazelle’ or high-growth firm is less associated with the size of a firm as we can find ‘Gazelles’ from nearly all sizes. However, on average, small firms are overrepresented in a subset of HGFs, but the few large HGFs are important as they are major job contributors in absolute terms.5 In this report, we will analyse the characteristics for subsets of Belgian high-growth firms. The report consists of three parts. To start, it gives an overview of the profile and characteristics of the subset of high-growth firms in Belgium, focusing on 2014-2017, the most recent three-year period available. Thereafter, the main results of the annual Vlerick Growth Survey are presented, including the responses of 83 Belgian CEOs of growth firms. A variety of topics were covered in this survey, ranging from the most important barriers and enablers of growth through to the HR, innovation and digitization policies that are being applied. At the end of the report, an alphabetical list of the 822 Belgian high-growth firms for the period 2014-2017 can be found (with number of employees adopted as the growth measure). Our solution to your specific needs 4 Birch, D. (1979), The Job Generation Process, MIT Program on Neighbourhood and Regional Change, MIT, Cambridge 5 Henrekson, M. & Johansson, D. (2010), ‘Gazelles as job creators: a survey and interpretation of the evidence’, Small Business Economics, volume 35 (2), p. 227-244 2 HIGH-GROWTH FIRMS IN BELGIUM: THE STATE OF AFFAIRS HOW MANY HGFs DO WE HAVE? Table 1 gives an overview of the evolution of the number of employment HGFs and added value HGFs over the last nine years. The percentage of HGFs remains relatively stable across the six periods of analysis. The relative number of employment HGFs ranges from a low of 3.15% for the period 2012-2015 to a high of 3.57% for the period 2009-2012. For the most recent period, 2014-2017, 3.48% of Belgian firms with at least ten employees qualified as high-growth in terms of employment. The percentages for the subsets of added value HGFs are slightly more volatile, ranging from a low of 5.91% in the period 2009-2012 to a high of 6.94% in the most recent period 2014-2017. Hence, we can discover a positive trend with respect to the percentage of HGFs in our economy. The relative number of employment HGFs has been on the rise for several years, resulting in the highest percentage since the period 2009-2012, and the percentage of added value HGFs has now reached its highest level since the start of our calculations. 2009- 2010- 2011- 2012- 2013- 2014- 2012 2013 2014 2015 2016 2017 Total number of firms (>10 employees) 23,867 24,262 24,930 24,633 22,442 23,654 Number of employment HGFs 853 835 799 775 744 822 Number of added value HGFs 1,410 1,616 1,507 1,530 1,532 1,641 Relative number of employment HGFs 3.57% 3.44% 3.20% 3.15% 3.16% 3.48% Relative number of added value HGFs 5.91% 6.66% 6.04% 6.21% 6.83% 6.94% Table 1: Evolution in the number of HGFs from 2009 to 2017 DO HGFs SUSTAIN THEIR GROWTH? The percentages that were presented in the previous section show only a small minority of firms are able to achieve a high-growth status. However, persisting as a HGF might be even more difficult. With this in mind, we analysed the subsets of employment HGFs for six overlapping periods (from the period 2009-2012 to 2014- 2017) (see Figure 1). Our solution to your specific needs 3 Figure 1: Overview of the overlapping analysed HGF subsets This analysis revealed that 2,791 Belgian firms qualified as employment HGFs between 2009 and 2017. Of this group, 1,560 firms (55.90%) were identified as an HGF in only a single period.