Insights

Netherlands heads the European field in fast-growing companies

11 November 2015

Ambitious plans are prerequisite for maintaining lead. A full version of the ScaleUp Dashboard report can be found here.

When it comes to the share of fast-growing companies, the Netherlands’ private sector scores well above the European average. This is one of the findings of the ScaleUp Dashboard report, published by Rotterdam School of Management, Erasmus University (RSM) and the Erasmus Centre for Entrepreneurship (ECE). ScaleUp Dashboard is a new annual study that focuses on fast-growing companies in the Netherlands, with research being headed by Justin Jansen, Professor of Corporate Entrepreneurship at RSM.

“Research results show that in a three-year period, fast-growing companies in the Netherlands have created 70,000 new jobs. As such, they form the backbone of our economy. To be clear: this large number of new jobs is created by a segment that in absolute terms makes up less than 0.5% of the Dutch private sector”, says Jansen.

“Nevertheless, despite this strong starting position, the percentage of fast-growing companies in the Netherlands has fallen dramatically”, continues Jansen. “To maintain our lead, we will need to focus more on encouraging and facilitating fast-growing companies.”

The results of the ScaleUp Dashboard show that 5.4% of Dutch firms with over 10 employees can be categorised as fast-growing companies. “This percentage is significantly higher than the share of fast-growing companies in the UK, Germany or France – even though over the past few years, these countries have been singled out as Europe’s ‘scale-up nations’”, says Jansen. “While in absolute terms, these countries may have more fast-growing companies, in relative terms, the Netherlands turns out to have a significantly higher percentage of fast-growing companies that can report an annual growth of at least 20% over a three-year period. In the UK, 4.6% of the firms with more than 10 employees can be classified as fast-growing companies. In France and Germany, these percentages are even lower.”

Fast-growing companies double their turnover and workforce

The ScaleUp Dashboard researchers have made an inventory of all fast-growing companies in the Netherlands. In the period 2011-2014, these firms have achieved an average increase in turnover of 119%, with employment at these companies rising by 125%. On average, fast-growing companies in the Netherlands have expanded their workforce from 20 to 45 FTEs over this three-year period. Indeed, one of the key challenges faced by fast-growing companies today is how to attract sufficient numbers of ambitious and qualified new employees.

Despite this good starting position, fewer and fewer companies are managing to achieve this kind of fast growth

Nevertheless, it is alarming to observe that over the past seven years, the percentage of fast-growing companies in the Netherlands has fallen by more than 50%: from 11% of the private sector to 5.4%. “We need to halt this negative trend as quickly as possible”, says Jansen. One of the key factors in the relative decline in the share of fast-growing companies was the economic downturn of recent years. Despite promising indicators with regard to the Netherlands’ competitive position, it still proves very difficult for Dutch firms to successfully enter new growth markets and create more added value. In recent years, Dutch companies have mainly concerned themselves with implementing cost reduction programmes, consolidating existing activities and raising productivity levels. Although this strategy has helped them to weather the economic crisis – and to slowly but surely improve their bottom line in the process – the best paths to achieving fast growth are developing new revenue models, entering new markets and innovating one’s range of products and services.

Fast-growing companies run up against a number of constraints …

According to Jansen, the Netherlands’ recent status as one of the most competitive countries in the world is a good starting point. “But we need to realise that fast-growing companies face specific challenges that require relatively specific solutions. The ScaleUp Dashboard shows that most fast-growing companies employ between 10 and 50 people. In many cases, the companies in question are young SME firms that not only offer a solid product or service, but also aim to grow faster than the competition. These companies often run up against constraints in the area of financing, leadership qualities, attracting new people and access to new growth markets. In other words, they have the potential to expand at a rapid pace, but find it difficult to actually realise this ‘growth spurt’.”

… which means that it is crucial to develop an ambitious policy for this category.

Right now, many of these fast-growing companies fall between two stools. Over one-third of these firms are found in the wholesale, retail or business services sectors, meaning that they are unable to benefit from programmes developed within the government’s Top Sector Policy. In the most recent period, thanks to the efforts of the StartUpDelta organisation, there has been a strong interest in setting up an ecosystem for Dutch start-up ventures. But while start-ups make an important contribution to economic activity and innovation, we should keep in mind that launching a new company and realising double-figure growth are two entirely different games. Building on the success of existing national and regional initiatives aimed at stimulating and facilitating start-up ventures, the time has now come to further develop the Dutch ecosystem for established fast-growing companies.

“I would like to argue for setting ourselves an ambitious target: in three years’ time, the Netherlands should be home to another 500 new fast-growing companies. That amounts to 1% of all Dutch companies with more than 10 employees”, says Jansen.

A full version of the report can be found here.

Rotterdam School of Management, Erasmus University (RSM) is consistently included among Europe’s leading business schools and among the top 3 in the field of research. RSM provides ground-breaking research and education, with a focus on promoting excellence in all aspects of management. RSM’s home base is the major international seaport of Rotterdam, a bustling hub of business, logistics and trade. RSM works to deliver business leaders who are equipped for an international career. Armed with a truly innovative line of reasoning and a world-class social studies bachelor’s or master’s degree, MBA, PhD or executive programme certificate, RSM graduates are prepared for a sustainable future. RSM also offers its support services for executives and alumni via a local office in Taipei, Taiwan. www.rsm.nl

Erasmus Centre for Entrepreneurship (ECE) is Erasmus University Rotterdam’s centre of expertise in the field of entrepreneurship, and is a joint initiative of Rotterdam School of Management, Erasmus University (RSM) and Erasmus School of Economics. The Rotterdam Science Tower is home to over 50 fast-growing start-up ventures. ECE organises custom programmes on the themes of start-ups, innovation and entrepreneurship within existing organisations for over 1,000 private-sector firms per year.

For further information about the subject of this press release, please contact Marianne Schouten, Media & Public Relations Manager at RSM via tel.: +31 10 408 2877 or email: mschouten@rsm.nl; or contact Professor Dr Justin Jansen, Professor of Corporate Entrepreneurship (RSM), via tel.: +31 10 408 9782 or email: jjansen@rsm.nl

How To Get There Summit. On the 19th of November the How to Get There Summit (www.htgt.nl) will take place in the Rotterdam Science Tower. Among the experts and speakers are Harold Goddijn (CEO TomTom), Daan Roosegaarde (Inventor/Entrepreneur), Neelie Kroes (StartupDelta), Stephen Gold (CMO IBM Watson Group), Prof. Michael Shanks (Stanford), Henk Kamp (Minister of Economics Affairs), Ben Verwaayen (former CEO British Telecom) and many more. The summit aims to bring the world of corporate innovators, startups and innovation hubs closer together. How To Get There Summit is part of the Innovation Festival. During this innovation festival on November 19th four main events are taking place throughout the day: How To Get There Summit, Getting Smart Congress, Clean Tech Summit and the Dutch National Final of international startup competition Get in the Ring. For tickets go to www.htgt.nl/ticket 

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