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Is small beautiful? The case of the Swedish IT industry

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  • Dan Johansson

Abstract

In this paper, the net job contribution of new and small firms in the Swedish Information Technology (IT) industry is investigated. The analysis is based on an extensive data set covering all IT firms in Sweden between 1993 and 1998. The smallest firms and new firms have experienced an extraordinarily fast growth and have created all net jobs in the industry, while large and old firms were major job losers. Private firms and independent firms, furthermore, grew faster than firms owned by the government and firms in enterprise groups. The results raise questions about Swedish economic policy and institutions, which have systematically disfavoured exactly those firms that the analysis shows have generated most of the growth in employment. The conducted policies (mainly introduced in the late 1960s and early 1970s) may partly explain the low economic growth observed in Sweden during the last three decades.

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  • Dan Johansson, 2004. "Is small beautiful? The case of the Swedish IT industry," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 16(4), pages 271-287, July.
    • Handle: RePEc:taf:entreg:v:16:y:2004:i:4:p:271-287
    DOI: 10.1080/0898562042000263258
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    References listed on IDEAS

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    1. Dan Johansson, 2005. "The Turnover of Firms and Industry Growth," Small Business Economics, Springer, vol. 24(5), pages 487-495, June.
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    5. Zoltán J. Ács (ed.), 1996. "Small Firms And Economic Growth," Books, Edward Elgar Publishing, volume 0, number 524.
    6. Mervyn A. King & Don Fullerton, 1984. "The United States," NBER Chapters, in: The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany, pages 193-267, National Bureau of Economic Research, Inc.
    7. Mervyn A. King & Don Fullerton, 1984. "The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany," NBER Books, National Bureau of Economic Research, Inc, number king84-1.
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    Cited by:

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    3. Edquist, Harald, 2005. "The Swedish ICT miracle -- myth or reality?," Information Economics and Policy, Elsevier, vol. 17(3), pages 275-301, July.
    4. Joseph LiPuma & Scott Newbert & Jonathan Doh, 2013. "The effect of institutional quality on firm export performance in emerging economies: a contingency model of firm age and size," Small Business Economics, Springer, vol. 40(4), pages 817-841, May.
    5. Luis Fernando Lanaspa Santolaria & Irene Olloqui Cuartero & Fernando Sanz Garcia, 2012. "Common Trends and Linkages in the US Manufacturing Sector, 1969–2000," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 36(5), pages 1093-1111, September.
    6. Silvina A. Romano & Jon Mikel Zabala‐Iturriagagoitia, 2022. "Davids versus Goliaths: Epigenetic dynamics and structural change in the Swedish innovation system," Growth and Change, Wiley Blackwell, vol. 53(4), pages 1737-1761, December.
    7. José A. Belso Martínez, 2005. "Equilibrium entrepreneurship rate, economic development and growth. Evidence from Spanish regions," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 17(2), pages 145-161, March.
    8. Eko Atmadji, 2012. "Fuel price increase and manufacturing firms survival in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 4(1), pages 2-14, April.

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