18-08-16

Born globals – presence, performance and prospects

In a recent published article in the scientific journal International Business Review, Pontus Braunerhjelm and Torbjörn Halldin analyze the occurrence and performance of so-called born globals over time. The authors show that contrary to expectations, born globals is a rare phenomenon.

The concept born global firms has gained a spectacular increase in interest from both academic and political circles. Rigorous quantitative treatment of born global firms are however rare in the international business/economics literature. Implementing unique data on all Swedish start-ups during 1998–2008 in the manufacturing sector, we conclude that born global firms are a very rare event, that their prevalence seems invariant to time, and that they perform similar to other matched “twin” firms with regard to profitability and productivity but report a considerably higher growth in employment and sales. These results are robust to a wider definition of born global firms and to the timing of performance measurements.

Highlights from the article:

  • Presence of born global firms (BGFs) is rare and has not increased over time, only 0.6-3.3 percent of all newly established companies in the Swedish engineering industry can be considered as belonging to this group.
  • BGFs perform better than other firms as regards growth in sales and employees.
  • BGFs perform worse in terms of profits and medium-term productivity.
  • Prospects for BGFs depend on firms’ ability to handle short- to medium-term losses.
  • Expectations by EU and OECD on BGFs growth effects may be excessive and unrealistic.

Read the article in International Business Review