The debate about superstar firms and superstar effects has been intensifying, partly in response to the rapid growth of global US tech companies. However, scratch the surface and the superstar phenomenon may not be quite what it seems. Wider dynamics may be at play.
What’s Driving Superstar Companies, Industries, and Cities
The top 10% of firms account for 80% of the economic profits created by firms above a billion dollars of revenue. The top 1% accounts for 36% of all the economic value created by public and private corporations worldwide in this size range. The bottom 10% destroy roughly as much economic value as the superstar firms create. The distribution of economic value is also getting more skewed over time, and at both ends. Superstar firms create 1.6 times more economic profit on average today compared to 20 years ago. But this is also mirrored by firms in the bottom 10%, which account for 1.5 times more economic loss today than 20 years ago. Contrary to popular perception, these superstar firms are not just Silicon Valley tech giants. They come from all regions and sectors and include global banks and manufacturing companies, long-standing Western consumer brands, and fast-growing U.S. and Chinese tech firms. In fact, both the sectoral and the geographic diversity of superstar firms is greater today than 20 years ago.