Skip to content

Into the Scale-up-verse: Exploring the landscape of Canada’s high-performing firms

December 2021

Into the Scale-up-verse: Exploring the landscape of Canada's high-performing firms



  • David A. Wolfe
  • Azana Hyder
  • Shilbee Kim
  • Jessica Thomson



Executive Summary

Canada’s scale-ups, or companies that experienced sustained periods of high growth, are multi-faceted, not just in their geographic distribution or industry composition, but in the many different ways they contribute to the Canadian economy. As a group, scale-ups in Canada contribute significantly to Canada’s employment growth, export values, innovation, and productivity growth. Such contributions meant that policymakers have, in recent years, focused greatly on how to encourage the creation of more scale-ups. Yet, we know little about what scale-ups are and how they behave in Canada. Importantly, many conversations surrounding scale-ups too often treat the category as a monolithic entity, where each individual scale-up company creates significant employment impact, foster innovation, and export Canadian goods at the same time.

In this report, we leverage the most detailed dataset in Canada concerning business dynamics, covering all registered companies in Canada, to analyze scale-up behaviour.

We focus not only on the different ways that companies’ growth can be measured, but also on the varied ways in which they engage in business, from export to innovation. This is the most comprehensive look at scale-ups in Canada thus far. This executive summary highlights the report’s major findings and themes.

A framework for understanding business growth

  • Companies grow in multiple different ways, and whether they grow their employment, their output, or their productivity matters greatly in how they behave. In this report, we examine six definitions of firm growth, and show that conversations concerning scale-ups need to distinguish between these vastly different types of companies for a more informed approach to policy design.
  • In understanding business growth, firm size is one variable. How quickly firms grow and how consistently they grow are also important factors. Discussions regarding impactful firms often focus on the absolute size of the business. However, scale-ups that satisfy the definition with lower growth thresholds behave largely in the same way as firms that satisfy the definition with a higher growth threshold (where the growth magnitude and consistency are both similar).
  • Only around 1 in 100 companies meet the definition of a scale-up in Canada. However, despite their rarity, revenue scale-ups attain revenue levels of at least 20 times those achieved by non-scale-ups, and employment scale-ups attain employment levels of at least five to ten times that of non-scale-up companies. While these companies are defined by their growth in their respective metrics, the scale at which these firms differ from non-scale-ups is notable.
  • The share of companies qualifying as scale-ups has recovered since the 2008 financial crisis. This share has remained stable between 2012 and 2016. While scale-ups also felt the economic disruption brought on by the 2008 financial crisis, the largest of these firms were the most likely to persevere, and the subsequent recovery in the share of scale-ups in the economy means they continue to be an important part of the economy.
  • Scale-up companies are highly productive, but once confounding factors are controlled for, some of these differences disappear. On average, scale-up firms show productivity growth levels that are significantly higher than non-scale-ups. However, after controlling for confounding effects, such as the industry composition as well as geographic composition of these companies, the initial positive differences in productivity disappear for all but scale-ups defined under the revenue definition. In particular, those that qualify as scale-ups under the Kauffman Employment definition (firms that grow while they are still young) see a statistically significant negative productivity growth association.
  • Average pay at scale-ups is not always higher than average pay at non-scale-ups, but is highly industry-dependent. While scale-ups contribute significantly to the economy, pay differences between scale-ups and non-scale-ups are not always present, and we only observe significant differences between scale-ups and non-scale-ups defined under the revenue-based definition. However, in some specific industries (such as technology), we see higher pay reflected in technology scale-ups defined by all three definitions.

Scale-ups reflect the regional and industrial diversity of Canada, and results at the sub-national and sub-provincial levels need to be considered carefully

  • While significant geographical heterogeneity in scale-up activities exists, the relative rarity of scale-ups makes sub-provincial analysis difficult. This is the first analysis that we know of that disaggregates scale-up behaviour by a sub-provincial geography, and we see some surprising results in terms of locations where scale-ups tended to be concentrated. Notably, there were specific non-urban geographies, such as northern Ontario, that recorded a relatively high share of scale-ups. However, due to the still-small numbers of firms implicated, deeper analysis in examining such geographical heterogeneity is difficult.
  • Geographical differences extend across time, where we see different trends in different regions across Canada. Despite the relative stability in the share of scale-ups nationally, when scale-up activities are disaggregated at the regional level, we saw considerable variation in how the share of scale-ups changed over time. While some regions in the country, such as British Columbia, saw consistent increases in the share of scale-up companies over time, others, such as the Prairies (comprising Alberta, Saskatchewan, and Manitoba) saw a brief rise in the share, followed by a steep drop in the share by 2016.
  • Such differences extend to the industry sectors in which scale-ups originate. Here we see few industries perform well under all three of the scale-up definitions examined in detail. Often, we see industries with high levels of activity under one scale-up definition do not have such levels of activity under another scale-up definition.
  • While the location where scale-ups are headquartered is important, they may not fully reflect the geographies where scale-ups actually record their impact. Importantly, metropolitan areas with higher scale-up concentration did not exhibit different levels of productivity growth that can be attributed to resource reallocation compared to metropolitan areas with lower scale-up concentration. This may be due to the fact that a scale-up’s impact does not fully correspond with the legal jurisdiction where it is headquartered.

Scale-ups are important drivers of both innovation and exports in Canada

  • The rate at which scale-ups export are 10 times that of non-scale-ups under both the Kauffman Employment definition and the Kauffman Revenue definition. However, differences between scale-ups and non-scale-ups in export behaviour may reflect the average size of companies. This is also seen in the higher revenue and employment levels associated with higher volumes of export in a company. We see differences in the rate at which scale-ups export under the OECD Employment definition, and the relevant firm sub-population (those with at least 10 employees). This implies the importance of accessing international markets in attaining a certain size for Canadian companies. However, even in these instances, higher export volume is associated with a higher likelihood of a firm qualifying under the OECD Employment definition.
  • Scale-ups are also associated with higher likelihood and volume of research and development (R&D) spending; however, while further research is needed, larger firms saw increased benefits from higher R&D spending. Across all three scale-up definitions, we observe significantly higher levels of R&D spending compared to non-scale-ups. These impacts remain when we controlled for confounding factors. However, when we analyze the impact of R&D separately for companies of different sizes, we observe that the larger the company, the higher the employment and revenue impact it experienced for additional increases in R&D spending. However, we note the potential difficulty in further scaling already-high R&D spending at these large firms.
  • There is a decline over time in the share of scale-ups investing in R&D. While scale-ups are more likely than non-scale-ups to invest in R&D, we observe a general decline over time in the share of scale-ups that invest in R&D. This finding is consistent with other works that analyze the innovation economy in Canada and should be noted.
  • While general investment in R&D activity was associated with growth, receiving a patent was less likely to be associated with an immediate impact on revenue. While patent grants are positively associated with the higher likelihood that the company is an employment scale-up, we see no statistically significant association with the likelihood of a firm being a revenue-based scale-up. This likely reflects the fact that the revenue and commercialization impact of a patent is not immediately realized. However, we still see patents are positively associated with business size, likely implying an increased ability for larger firms to engage in patenting.

Overall, we find that while scale-ups in Canada contribute to the economy in ways expected of them, different types of scale-ups contribute differently. No single scale-up definition satisfied and supported all policy objectives cited in the interests of scale-ups. We argue, therefore, for a shift away from a sweeping focus on specific industries or a particular set of firms without considering and identifying clear policy objectives that scale-ups originating from those contexts need to achieve. Instead, we advocate for a discourse that, as a first step, clearly defines the policy objectives desired before identifying the set of firms that are most likely to achieve such objectives once they scale up. We also recommend designing policies specifically in aid of such policy objectives.