High-Growth SMEs’ Job Creation Performance and its Implications

In most countries, including Korea, job creationtops policymakers’ to-do lists. Therefore, it is only natural that they pay increasing attention to highgrowth small and medium-sized enterprises(Highgrowth SMEs), which are seen as important primary sources of jobs.The interest in the job-creation capacity of highgrowth SMEs began to soar under the influence of a research report by economist David L. Birch in 1994. Birch described high-growth firms as “gazelles”, and concluded that the primary sources of new jobs are neither large enterprises nor SMEs, but high-growth firms. His conclusion also represented a clear breakaway from Birch’s 1981 study in which he discovered through empirical analysis that job creation primarily rested with SMEs with 100 employees or less. He further stressed the need to foster SMEs to maintain their role in the creation of employment.Birch’s 1994 study spurred policymakers in industrial countries to shift their focus from fostering SMEs as a whole, to identifying and nurturing those with high growth potential. Several OECD member nations have since conducted active research into such high-growth firms and focused on their role in job creation, but such research in Korea has been rather sluggish so far.To help redress this, this paper briefly examines the links between high-growth firms and the relevant previous research at home and abroad, and seeks to measure the job-creation performance of high-growth firms by using KISVALUE-Data on individual companies in the domestic manufacturing sector. Through this process, the study aims to determine whether Korean firms have adequately fulfilled their hiring potential. In addition, this paper looks into changes in the number of high-growth SMEs in the domestic manufacturing sector in order to better forecast their job-creation capacity in the future with the goal of judging whether such high-growth SMEs will be able to continue to maintain their hiring capacities. Lastly, policymaking suggestions and options are intended to be drawn up on the basis of such measurements, so that problems identified in the process can be dealt with