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Technology-based firms in Scotland


Technology-based firms (TBFs) are viewed as key growth catalysts in the economy and fundamental drivers of innovation and new technological development. This study examines the nature of growth of TBFs in Scotland, looking in particular at high-growth firms (HGFs). It considers what role is played by TBFs within the overall population of Scottish HGFs and the proportion of TBFs which achieve high growth in Scotland. The report also discusses the characteristics of TBFs, the challenges faced by TBFs, their drivers of growth, how these firms grow differently from non-high-tech firms, and the contribution TBFs make to economic development in Scotland.


The methodology consisted of: a literature review; an analysis of the Inter Departmental Business Register (IDBR)-based Business Demography dataset (of ONS data), held by the Business Structures Database; an analysis of TBFs on the FAME database, based on company accounts submitted to Companies House; and face-to-face and telephone interviews with senior managers (usually the CEO) of 19 high-growth technology firms.


The report finds that TBFs represent around 12 per cent of the overall population of HGFs in Scotland. Scotland’s proportion of high growth firms that are TBFs is the second lowest of all UK regions. However, the growth performance of these firms is on a par with the UK as a whole and the incidence levels of HGFs within the population of TBFs is above the stock of firms as a whole. High growth TBFs are also smaller and younger than high growth firms as a whole. Scotland's technology sector has a high level of external ownership and Scottish-owned TBFs are predominately engaged in business to business (B2B) markets. Either directly or indirectly, the North Sea oil and gas sector accounts for one-third of technology firms in Scotland. Scottish-owned technology firms exhibit considerable diversity in terms of their age, size and activities, although the majority are well-established with non-linear and discontinuous growth. Many of the smaller HGF high tech firms encounter growth constraints in relation to recruitment, access to debt and equity finance and distance from major markets. Companies of scale play a strategic role in developing TBFs in Scotland, notably as a source of market pull and important supply for emerging companies. The majority of firms interviewed have had significant public sector support, which was generally regarded as helpful and, in some cases, extremely beneficial.


No specific recommendations were made.

Author Colin Mason; Ross Brown
Published Year 2012
Report Type Research
  • Sectors
    Digital markets and enabling technologies