Into the Scale-up-verse: Exploring the landscape of Canada’s high-performing firms
December 10, 2021
Scale-ups, or high-growth firms, are responsible for the vast majority of productivity growth in Canada, making them an immensely powerful tool in the pursuit of Canada’s long-term economic stability and prosperity. However, only 1 in 100 young firms reach scale-up status within their first ten years. How can we harness, support, and amplify the power of scale-ups and their contributions to the Canadian economy?
A new study, Into the Scale-up-verse, takes the first step toward better equipping policymakers to support the success of Canadian firms by unpacking the complexity and nuance in Canada’s diverse scale-up universe. Produced jointly by the Brookfield Institute for Innovation + Entrepreneurship and the Innovation Policy Lab at the University of Toronto’s Munk School of Global Affairs & Public Policy, this report analyzes the most recent and detailed dataset concerning Canadian business dynamics to provide a novel and comprehensive guide for those in a position–such as academic researchers, industry players, and government policymakers–to design supportive economic policy and facilitate productive conversations about Canada’s scale-ups.
Among the findings in the report, we identify key themes that best summarize what we now know about scale-ups in Canada:
- Productivity: Scale-ups drive the majority of productivity growth in Canada. With high-growth firms in many industries experiencing productivity growth in excess of 25% in a single year, there is little doubt that scale-ups are an integral part of Canada’s long-term economic sustainability.
- Employment: Scale-ups are leading contributors to increased employment and job quality in Canada. Scale-ups employ ten times the number of people compared to non-scale-ups, and average pay at scale-ups exceeds non-scale-ups in almost all industries and across economic regions of Canada.
- Innovation: Declining investment in R&D poses a risk to scale-ups reaching their full potential. Although scale-ups are more likely than non-scale-ups to spend on research and development—a key driver of firm growth and sustainability—overall R+D investment is stagnating.
- Exporting: Scale-ups are more likely to export than non-scale-ups. Successfully exporting is a sure sign that a firm has raised their growth ceiling, expanded their market reach, and bolstered their organizational sophistication.
- Economic Policy: Scale-ups are too diverse and complex for a “one size fits all” policy approach. Using new and comprehensive insights into the three ways scale-ups are defined and measured, policymaking can now apply a more targeted approach to supporting the success of different types of high-growth firms, their behaviours, and contributions.