Number of fast-growing enterprises in Norden on wane

The number of fast-growing growth enterprises, or scale-up enterprises, has fallen in the Nordic countries by 12 per cent in the growth period 2017 to 2020 compared with the growth period 2016 to 2019, according to Statistics Finland.

At the same time, turnover and full time equivalent number of employees (employment FTE) in scale-up enterprises have grown strongly, however.

There were 5,600 scale-up enterprises in the Nordic countries during the growth period 2017 to 2020. This is nearly 800 enterprises fewer than in the previous growth period 2016 to 2019. The number is lowest in the measuring history that started in 2014 to 2017.

The decline in enterprises is probably due to the economic effects of the corona pandemic that started in early 2020.

Especially the number of scale-up enterprises that grow by turnover has decreased, which is most likely due to the impact of economic shutdown measures on turnover growth especially in spring 2020.

On the other hand, the schemes and packages supporting employment during the coronavirus crisis, which compensated enterprises for pay costs and enabled enterprises to keep their employees during lockdown, allowed the number of scale-up enterprises growing by number of employees to remain relatively stable.

However, Nordic scale-up enterprises increased their economic significance during the reference period.

In the period 2017 to 2020, their turnover grew by as much as 110 per cent and employment FTE by 43 per cent.

The growth was particularly strong in knowledge-intensive service industries, where turnover increased by 209 per cent and employment FTE by 90 per cent.

Scale-up enterprises account for 0.4 per cent of all Nordic enterprises. In Finland, the share is still below the Nordic average, 0.3 per cent.

Nearly one quarter of Nordic scale-up enterprises operate in trade, one fifth in construction and 16 per cent in manufacturing.

More than one-half of scale-up enterprises that grow only by employment FTE operate in service industries.

Two-thirds of scale-up enterprises that grow only by turnover operated in manufacturing, construction or trade.

Scale-up enterprises are enterprises with 10 or more full time equivalent number of employees and an annual turnover of EUR two million or more in the start year of observation and whose average annual growth over three years is at least 20 per cent per year.

Most of the Nordic scale-up enterprises, 79 per cent, are in domestic ownership. In Finland, 82 per cent were domestically owned.

Foreign ownership is focused on enterprises that are mainly exporter enterprises in manufacturing or in trade and knowledge-intensive service industries.

Nordic foreign owned scale-up enterprises and especially those scale-up enterprises where ownership changed over the reference period from domestic to foreign grew more than domestically owned scale-up enterprises with all the examined indicators (employment, turnover, exports).