Focus political labor-market measures on the availability of complementary manpower in rural areas to give fast-growing companies better chances of survival.
Fast-growing companies are an important resource for creating job opportunities in rural regions. They can be found in all fields, and contribute by providing new products or services. Studies on a selection of 1,589 fast-growing companies from Sweden’s entire population of companies show that a greater availability of complementary manpower in rural areas would offer fast-growing companies better chances at survival.
Complementary manpower refers to the recruitment of individuals whose knowledge and competencies are more related than identical to or completely different from the knowledge and competence already found within a given company.
Types of experience and knowledge are decisive
In rural regions, it is crucial to have access to manpower that is both directly and indirectly related to a company’s prevailing area of expertise. Research results show that it is not the number of people recruited during a company’s growth period that matters; it is rather what types of experience and knowledge the recruits have and whether these are complementary to the company that influence its future survival.
One explanation for companies’ success could be that they complement the competence they already have in house, and thereby avoid recruiting a workforce with identical knowledge areas, which has been shown to lead to an increased risk of bankruptcy or takeover.
Other know-how than simply industry-specific knowledge offers more in situations of competition with companies that have been in the field a long time and make better use of their existing resources. In urban regions, the type of recruited manpower is less significant; it is more important that a company is localized within the same local labor market as companies in complementary fields.
Let the support reflect the need
In conclusion, the recommendation is to support political labor-market measures that facilitate the hiring of manpower with complementary knowledge, not least in rural regions. This can mean that a company may need more time during its recruitment phase in order to find the right candidate, rather than simply taking the first person to apply.
A goal of the study was to determine whether recruiting complementary competence during the growth phase has an effect on how well a company fares. Another goal was to judge the degree to which recruiting manpower from the same field, a complementary field, or a completely different field affects a company’s fate – i.e. whether it survives, is taken over, or goes bankrupt. The study investigated a selection of 1,589 fast-growing companies in Sweden between the years 2000 and 2010.
Borggren, J., Eriksson, R.H. & Lindgren, U. (2016) Knowledge flows in high-impact firms: How does relatedness influence survival, acquisition and exit? Journal of Economic Geography 16(3), 695-713