Gazelles of Good Hope
An article by Stanislav Rozmirovich, Deputy Director of the HSE GSB Institute of Innovation Management, has been published in the online version of the Expert magazine. The article tells about the results of the latest wave of research on high growth companies in Russia. Research is carried out by the HSE GSB Institute of Innovation Management
The study, which is discussed in the article, was conducted on the basis of the reporting data of Russian companies for 2020. An additional source for the analysis was a survey of 150 Russian high-growth companies conducted in March-April 2022.
That is, for the analysis, data were used for a year that was not the most favorable for rapid growth. It was in 2020 that the main blow of the coronavirus pandemic and the global economic downturn fell.
The study shows that in Russia, high-growth companies account for only 0.75% of the total number of legal entities. Such a small share is explained not only by the fact that the rest of the firms are growing slowly, but by the fact that 97% of these legal entities have less than 10 employees. If we take only companies with more than 10 employees, then high-growth companies account for 26% of them (28,617 out of 111,164 companies). At the same time, out of these 111,000 companies, 18% of companies had no revenue growth at all, and 56% had revenue growth over the period, but by less than 20% per year. If we compare the total increase in revenue of the Russian companies (27.9 trillion rubles for Russian companies with 10 or more employees) and the increase in revenue from high-growth companies (16.8 trillion rubles), it turns out that the contribution of high-growth companies is 60% of this increase. That is, in the period from 2017 to 2020, as in other countries, high-growth companies in Russia made the main contribution to revenue growth, and hence to overall economic growth.
Over three years, the revenue of all high-growth companies almost tripled: from 9.4 to 26 trillion rubles, the revenue growth was 41% annually. This means that high-growth companies can be considered as a very significant segment for the economy. For comparison: the total revenue of the 400 largest companies in Russia, according to the Expert magazine, amounted to 91.5 trillion rubles in the same 2020. In 2020, the number of employees of high-growth companies in Russia was 2.5 million.
What factors provided companies with such rapid growth, and their future plans, can be judged by the results of the survey. In the list of growth factors, the majority of respondents (46%) placed the company's availability of qualified personnel in first place. Surprising as it may seem, despite the traditional Russian business complaints about staffing problems, high-growth companies from year to year indicate in various surveys that they do not experience an acute shortage of qualified personnel. On the contrary, having a strong team of specialists is their competitive advantage and the basis for growth. Rapid growth, market dynamism, and well-equipped production facilities allow these companies, according to respondents, to be an attractive and reliable employer, providing an interesting and well-paid job with prospects for rapid career growth. Therefore, it is no coincidence that in their future plans they also set as a priority the task of maintaining and increasing the number of jobs and increasing the salaries of employees (31%).
In the article, the author concludes that in Russia there is a fairly representative layer of high-growth companies. Such companies play a key role in boosting GDP growth, creating new jobs and driving innovation. So far, the share of high-growth companies in the Russian economy is small. Until recently, they relied mainly on their own funds. In a crisis, the government can and should rely on these companies as a source of sustainable economic growth and effective anti-crisis strategies. These companies themselves have proven their ability to withstand the blows of the crisis and are ready for further growth. Russia's economic policy makers are faced with the strategic task of multiplying the number of such companies in Russia and the share of technological, innovatively active companies among them. It is necessary, using the best world practices, to launch a state program to support high-growth technology companies. Such a program should contain separate blocks of the regional, sectoral and federal levels. This will create conditions not only for overcoming the crisis, but also for a new round of economic growth.
Full text of the article in Expert magazine (Russian language): https://expert.ru/2022/05/16/gazeli-dobroy-nadezhdy/