From Start-up to Scale-up: An approach to Andalusian High Growth Companies Through Social Accounting Matrices

Abstract

Public authorities are increasingly focusing on the so-called scale-ups, i.e., start-ups that have experienced growth over 20% for at least three consecutive years. The general belief is that these companies have a greater impact on the economy, especially in terms of job creation, and therefore, in a situation where public resources are scarce, it is necessary to ask whether these resources should continue to be devoted to generation of new companies, or these should be oriented to the promotion of scale-ups. This paper addresses this question. In order to do so, we have chosen a regional economy (Andalusia, in Spain) and have studied how this issue affects it. Our starting point has been the impact that entrepreneurial activity has on the regional economy of Andalusia in terms of GDP, productive output and employment, which we have compared with the effect it would have if instead of creating new ventures, only companies with the characteristics of a scale-up would be created. For that purpose, we have developed a multisector model, based on Social Accounting Matrices (SAM), to measure this impact, and we have applied it to Andalusia in 2014. The results obtained show how in absolute terms scale-ups have a greater impact on gross domestic product, productive output and job creation than traditional entrepreneurial activity. However, this is not enough to justify ceasing allocation of funds to promote the creation of new ventures, to focus, instead, on the promotion of scale-ups.