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Gazelles in France: Analysis of Growth and Performance of SMEs

This study, commissioned by the Conseil d’Analyse Économique (CAE) in 2005, investigates the growth dynamics of "gazelles," defined as high-growth SMEs in France with 50 to 500 employees. By analyzing business data over extended periods, it differentiates between organic and external growth. The report reveals that gazelles account for half of the job creation despite being only 5% of firms. Their growth is influenced by both internal restructuring and external factors, showcasing varied patterns and performance under different economic conditions.

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Gazelles in France: Analysis of Growth and Performance of SMEs

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  1. Gazelles in France Claude Picart - INSEE

  2. Context of this study • A request of the Conseil d’Analyse Economique (2005) • CAE’s report : A SME Strategy for France • A big concern in France : the lack of middle-size companies (50 – 500 employees) • An answer in two steps • Using usual business data over a long period • Using a work in process (shorter period) in order to distinguish between organic growth and external growth Gazelles in France Claude Picart -INSEE

  3. 1 - Previous work in France • No specific study • A participation to an OECD project (Shreyer, 2000) • 10.000 permanent firms over 20 employees in the manufacturing sector (1985 – 1994) • Half of the enterprises gain jobs • Among the growth firms, the top 10% = 50% of job gains • Comparable results for other countries • Sweden : external growth = 2/3 of job gains Gazelles in France Claude Picart -INSEE

  4. Methodological choices • What we can track : legal entities (SIREN number) • Size criterion : employment • Selection of gazelles : for each size bracket, the top 5% (growth rate) of perennial firms • Long-distance gazelles (ten years) • Sprint gazelles (4 or 5 years) • Birch-type gazelles (regularity) • Not restricted to young firms Gazelles in France Claude Picart -INSEE

  5. Size and performance Gazelles 1993 – 2003 : growth (employees 2003/empl. 1993) and share of gross job gains 20 250 Gazelles in France Claude Picart -INSEE

  6. The performance of gazelles is relatively insensitive to economic conditions Four years growth (sprint gazelles) Innovations ? Intra-group restructuring operations ? Gazelles in France Claude Picart -INSEE

  7. The gazelle’s growth is uneven • Half of their decade-long increase concentrated in a single year • 1993 – 1998 gazelles : a contrasted fate • Under-represented among average performing firms (1998 – 2003) • Only 7% are among the 1998 – 2003 gazelles • Many of then disappear  Few gazelles as defined by Birch, in France • Disappearence : death or absorption ? Gazelles in France Claude Picart -INSEE

  8. 2 - Firms’ continuity • Longitudinal matched employer-employee database (DADS) • Demographic relation between A and B : at least half of the employees in one of the units in year n is in the other unit the other year Gazelles in France Claude Picart -INSEE

  9. External growth : half the gazelles’ total growth * Of which 73 for a single firm Gazelles in France Claude Picart -INSEE

  10. External growth : defensive • Gazelles are to be found in all industries • Mainly external growth in low-growth sectors 71 sectors (NES114)with at least 5 gazelles among thier SMEs Gazelles in France Claude Picart -INSEE

  11. External growth : offensive ? • External growth may be • Intra-group restructuring • A sign of dynamism • Independent gazelles • Gazelles leader in their groups • Indirect approach (see annex 3) • Autonomous growth presumption for 45% of gazelles : 31% independent + 14% ‘leaders’ Gazelles in France Claude Picart -INSEE

  12. Conclusion • Gazelles have oustanding performances • 5% of perrenial firms = 50% of gross gains • Workforce x 5 in 10 ans • This should be put in perspective • Performances presumably < US gazelles • External growth • 50% of gazelles’ growth • More in sluggish-growth industries • Only temporary performances • We need to improve the tracking of enterprises and groups Gazelles in France Claude Picart -INSEE

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