7, January 2026

Where are the high growth firms, and can we get more of them?

According to a November 2025 report from the OECD, high growth firms (HGFs) make  a significant contribution to job creation, productivity and innovation in all OECD countries. According to Statistics Canada 5.7% of firms were HGFs in 2023 (measured by employees) and 12.9% of firms (measured by revenue.)  Almost two million people work in HGFs (measured by revenue), about 9% of the labour force.

Background.

There are a number of different definitions of a high growth firm. The one used by Statistics Canada is “an enterprise with average annualized growth greater than 20% per annum over a three-year period, with at least 10 employees at the start of the period and be at least 4 years old. The growth can be measured by the number of employees or by revenue.”

Provincial breakdown

The proportion of HGFs varies quite a bit across the country, as shown below.

Province Number of HGF – employment Percent of firms – 2023 Number of HGF – revenue Percent of firms – 2023
BC 2,010 5.7 4,180 12.1
Alberta 1,700 6.6 3,780 14.7
Saskatchewan 300 4.8 660 10.5
Manitoba 360 4.6 820 10.5
Ontario 4,920 5.9 10,750 12.8
Québec 3,130 5.6 7,490 14.0
Nova Scotia 310 5.4 640 11.2
New Brunswick 210 4.6 520 11.4
PEI 60 5.4 180 16.2
Newfoundland 130 5.0 280 10.8
CANADA 13,130 5.7 29,370 12.9

Source: Statistics Canada, Centre for Special Business Projects (November 2025).

What do they do?

In Canada, accommodation and food services is the largest sector, followed by constriction and professional, technical, and scientific services. That differs across the provinces. Alberta, for example, has the most HGFs as a proportion of all businesses largely because of its large construction sector, which amounts to 16% of all HGFs, compared with 12% for Canada as a whole.

Characteristics of HGFs

We interviewed CEOs of a number of HGFs in Alberta and found the following.

  • HGFs are not a static category of firms but instead experience episodic, high-growth phases driven by market conditions, regulatory changes, or strategic pivots.
  • Only 15% of HGFs experience repeated high-growth phases, and many either stagnate or exit the market.
  • Attempts to predict which firms will experience high growth in advance remain highly unreliable, with success rates between 2% and 12% using various prediction methodologies.

These findings are consistent with the OECD report from 2021: “Policy debates often overlook the fact that high growth comes from a wide group of firms during an exceptional phase in their lifetime, rather than from a small group of exceptional firms that are constantly growing fast.”

These characteristics make HGFs difficult to pin down as they are a constantly changing set of firms, most of which will only ever have one high growth episode. This is challenging for policymakers trying to grow HGFs.

Because of the episodic nature of their growth, statistics on HGFs are very volatile and can change a lot from year to year, making it hard to evaluate their impact. It would be best to think of HGFs as a portfolio of firms, rather than focusing on an individual firm, as that is likely to be much more stable.

History and drivers of high growth.

The identification of HGFs as a key economic driver and job creator goes back to research by David Birch in the 1970s that showed that ‘gazelles’ – high growth smaller firms operating for no more than 5 years – make an outsized contribution to U.S. job creation. Subsequent research has demonstrated that HGFs are not confined to small or young firms.

There has been a large amount of research on the drivers of growth in HGFs, unfortunately not very conclusive. In particular there is no consensus on the two basic questions:

  • What are the antecedents of a high-growth episode?
  • Why are these so short-lived?

Much of the research on HGFs has been statistical in nature, and this approach has not been helpful in better understanding the underlying dynamics of the growth process. One researcher called HGFs “one-hit wonders” as the probability of recurring growth in the subsequent three-year period is very low.

Policy support.

A recent review of publications relating to HGFs shows that there is considerable skepticism whether public support for HGFs is either possible or desirable. Despite this, there have been a number of programs aimed at HGFs (including EU’s Horizon 2020 program with an initial budget of 80 billion euros), but unfortunately no evaluations of these programs are available.

It is not possible to identify HGFs before their high growth phase with any reliability, and their growth phase is too short to allow timely intervention. A better approach seems to be to support all firms and enjoy the HGFs when they happen.

Conclusion

A small number of firms create a large proportion of new jobs in growth spurts. HGFs occur in all Provinces, most frequently in accommodation and food services and construction. It is not possible to predict which firms will exhibit a growth phase, or how long it might last, with any reliability given the current state of knowledge. Because of this, there is no clear rationale for public support specifically for HGFs. So, unfortunately, we don’t know how to get more of them.

Peter Josty