Rapid growth of young companies is not limited to cities – rural areas also produce gazelle firms

Innovation and business growth are often associated with urban environments, but economic scale alone does not determine the presence of gazelle firms. A recent study conducted at the University of Oulu Kerttu Saalasti Institute examines the regional distribution of gazelle companies in Finland.

“The number of gazelle firms in relation to the population was clearly higher in urban areas than in rural areas. However, several rural municipalities were identified where young, rapidly growing companies exist,” says Ossi Kotavaara, Research Director of the Regional Excellence Research Group.

Significant regional and municipal variation was observed in rural areas. For example, municipalities located in core rural regions, such as Nivala, Tervola, Raasepori, and Kauhava, had relatively more gazelle firms compared to other rural areas.
“Gazelle firms tend to cluster in well-connected urban regions with high populations of young and working-age people, high levels of education, and strong educational opportunities. In cities, gazelle firms were common in software and consulting sectors, while in rural areas they were found in transportation, metal product manufacturing, and agriculture,” explains Project Researcher Pauliina Björk.

The study, based on Statistics Finland’s business register data from 2015–2021, investigated regional factors linked to rapid growth of young firms. Firm growth over the first five years of operation was analyzed at the municipal level. The regional variables included demographic characteristics, accessibility of the population, education levels, proximity to educational institutions, and industry structures. The study covered all of Finland except the Åland Islands.

Growth of young companies under five years old was measured both in relation to turnover and number of employees. Three different definitions of gazelle companies were used. “The definitions were expanded to include microenterprises with fewer than 10 employees, which have typically been excluded from gazelle research. This allowed for a better understanding of early-stage growth of businesses across different types of regions,” says Martti Saarela, Research Director at MicroENTRE.

“Finland is a sparsely populated country in global comparison. Therefore, it is important to understand the dynamics of rapid growth outside urban areas as well. Finland has companies capable of fast growth in different sizes, across varied regions, and in multiple industries,” notes Matti Muhos, Professor of Growth Management at the University of Oulu.
Photo: Pexels / Gustavo Fring

Publication:
Björk, P., Saarela, M., Kotavaara, O., & Muhos, M. (2025). Tracking spatial distribution and regional characteristics of gazelles. Entrepreneurship & Regional Development, 1–21

Contact information:

Project Researcher Pauliina Björk
University of Oulu Kerttu Saalasti Institute
pauliina.bjork@oulu.fi
+358 50 445 0096

Research Director Martti Saarela
MicroENTRE®, University of Oulu Kerttu Saalasti Institute
martti.saarela@oulu.fi
+358 50 473 5470

Research Director Ossi Kotavaara
Regional Excellence Research Group, University of Oulu Kerttu Saalasti Institute ossi.kotavaara@oulu.fi
+358 50 573 9124

Professor Matti Muhos, Director
University of Oulu Kerttu Saalasti Institute
matti.muhos@oulu.fi
+358 400 407 590