Unleashing firms' growth potential

Abstract

For a long time, growth has been assumed to be the result of an optimal combination of the production factors of labour and capital. This article argues that growth of companies no longer depends on only those two factors, but also on a third one: i.e., intangibles, such as investment readiness, investors mindset and entrepreneurship. Tangibles are the necessary, but not sufficient condition. The current era of robotization, digitalization and disruptive innovation increases the importance of the intangibles. Therefore, regional policy should henceforth be reoriented towards those intangibles leaving behind the classical subsidy-oriented policy, focused on SMEs as such, without controlling for those intangibles. That is the only way to achieve that companies with a growth potential can succeed in becoming a scale-up company, and that lifestyle companies optimize their growth potential. Moreover, if support policies are designed on that basis, they might even bring former offshored companies back.