Is small beautiful? The case of the Swedish IT industry

Dan Johansson

Entrepreneurship & Regional Development, 2004, vol. 16, issue 4, 271-287

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.

Date: 2004
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DOI: 10.1080/0898562042000263258

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