1,721,268 research outputs found
Introduction
No full textThe issue of firm growth - how it is achieved and managed, and what consequences it has for different stakeholders - is both theoretically interesting and practically important. It is also an area of scholarly enquiry that has expanded very significantly since we started doing research on it in the 1980s and 1990s. In this volume we present and comment upon the most recent contributions we have made to this field of inquiry - separately, jointly and with various colleagues (who are included in the 'we/us article authors' used in the remainder of this introduction). While the chapters have been published before in various places, we think it valuable to gather them in one easily accessible place, which also allows space for our reflective commentary across the individual chapters. We hope readers will find the work a useful and worthwhile addition to the extant body of knowledge about firm growth. We also hope they will find that it- as its title suggests- brings new•/ perspectives on firm growth and its study, and that it can inspire future contributions by other researchers. This is important, because despite the growing volume of research on firm growth, many important questions still lack satisfactory answers.\ud
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The current volume may be regarded as a follow-up of a previous collection where we- and Frederic Delmar- presented and commented on eight articles on (mostly small) firm growth that we had jointly or separately published up until that time (Davidsson et al., 2006). In that volume we organised the works under three broad themes: the conceptual and empirical complexity of the firm growth phenomenon; growth aspirations and motivations; and patterns and determinants of actual growth The current volume builds on and extends these themes. Only one of the chapters in the previous volume directly addressed the issue of drivers of actual growth. We add three more in this book, two of which expand on the (aspirations and motivations' theme by relating growth aspirations and motivations (or lack thereof) of the owner-manager to the actual growth achieved in the subsequent period. \u
An operationalization of Stevenson’s conceptualization of entrepreneurship as opportunity-based firm behavior
Full text linkThis is the author-version of article published as: Brown, Terrence and Davidsson, Per and Wiklund, Johan (2001) An operationalization of Stevenson’s conceptualization of entrepreneurship as opportunity-based firm behavior. Strategi
Organic and acquisitive growth : re-examining, testing and extending Penrose’s growth theory
No full textThe Theory of the Growth of The Firm by Edith Penrose, first published in 1959, is a seminal contribution to the field of management. Penrose's intention was to create a theory of firm growth which was logically consistent and empirically tractable (Buckley and Casson, 2007). Much attention, however, has been focused on her unintended contribution to the resource-based view (henceforth RBV) (e.g. Kor and Mahoney, 2004; Lockett and Thompson, 2004) rather than her firm growth theory. We feel that this is unfortunate because despite a rapidly growing body of empirical work, conceptual advancement in growth studies has been limited (Davidsson and Wiklund, 2000; Davidsson et ai., 2006; Delmar, 1997; Storey, 1994). \ud
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The growth literature frequently references Penrose's work, but little explicit testing of her ideas has been undertaken. This is surprising given that Penrose's work remains the most comprehensive theory of growth to date. One explanation is that she did not formality present her arguments, favouring verbal exposition over formalized models (Lockett, 2005; Lockett and Thompson, 2004). However, the central propositions and conclusions of her theory can be operationalized and empirically tested
A resource-based view on organic and acquired growth
No full textUnderstanding the sources of business growth is central to both the fields of entrepreneurship and strategy. This is a logical endeavor given the positive macro-level outcomes of firm growth, such as the creation of new jobs, an increase in tax revenues, the provision of innovations, and overall economic growth (Wennekers & Thurik, 1999; Davidsson, 2005). At the same time as the macro-level outcomes, business growth has determinants on the micro-level. Indeed, the majority of firm growth studies have examined a long list of internal factors as predictors of growth, such as the founding team, founder’s prior knowledge and education, access to capital and financing, and/or networks. In particular, these studies argue that the firms’ resources are likely to influence its growth, and its increased size will have implications for what kind of management skills become crucial (e.g. Chandler & Hanks, 1994; Flamholtz, 1986).\ud
Despite the increase in the amount of research into this topic over the past decade (cf. Wiklund, 1998; Delmar, Davidsson & Gartner, 2003) the outcome of these reviews is, however, rather disappointing. It appears that despite the increased research efforts, relatively little of solid, generalizable knowledge has emerged. It has been suggested elsewhere that part of the explanation for this is likely that much research has overly simplistically treated business growth as one phenomenon (cf. Davidsson & Wiklund, 2000). In reality, there are several different modes and patterns of growth. For instance, Delmar, Davidsson and Gartner (2003), using numerous measures of growth, found seven different types of growth patterns. These different modes and patterns require different explanations, and they have different implications on the societal and organization level. \ud
In this book chapter we will focus on one particular aspect of the multi-facetted nature of business growth, namely the distinction between organic (or internal) growth and acquisition growth. While there are exceptions (Niosi, 2003; Delmar, Davidsson, & Gartner, 2003), few empirical studies of firm growth have dealt with this important distinction. More precisely, we will start from an empirical observation concerning organic vs. acquired growth. The observation is that there is a very strong empirical relationship between the size of a growing firm on the one hand, and what proportion of growth is acquired on the other. It turns out that in the smaller firms almost all the growth is organic while the converse is true for growth firms in the largest size classes. The purpose of this book chapter is, firstly, to try to make theoretical sense, within the framework of the resource-based view of the firm (RBV), of the strong firm size acquired share of growth relationship. Secondly, we will test hypotheses based on our theoretical reasoning on two independent sets of data
Dynamics of external growth in SMEs
No full textOur focus on external growth and related competence development as a process required observing and jointly examining a large number of variables that influence growth processes and, in particular, the complex relationships among them (Huber & Van de Ven, 1995). The heterogeneity of the phenomenon requires rich and deep descriptions aimed at assessing the abstractions and generalizations that can be meaningfully attempted (Davidsson, 2005, p. 56)
Asset specificity and behavioral uncertainty as moderators of the sales growth-employment growth relationship in emerging ventures
No full textNew venture growth is a central topic in entrepreneurship research. Although sales growth is emerging as the most commonly used measure of growth for emerging ventures, employment growth has also been used frequently. However, empirical research demonstrates that there are only very low to moderately sized correlations between the two (Delmar et aL, 2003; Weinzimmer, et al., 1998). In addition) sales growth and employment growth respond differently to a wide variety of criteria (Baum et al., 2001; Delmar et al., 2003). In this study we use transaction cost economics (Williamson, 1996) as a theoretical base to examine transaction cost influences on the addition of new employees as emerging ventures experience sales growth.\ud
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\\le theorize that transaction cost economics variables will moderate the relationship between sales growth and employment growth. W'e develop and test hypotheses related to asset specificity, behavioral uncertainty, and the influence of resource munificence on the strength of the sales growth/ employment growth relationship. Asset specificity is theorized to be a positive moderator of the relationship between sales growth and employment growth. When the behavioral uncertainty associated with adding new employees is greater than that of outsourcing or subcontracting, it is hypothesized to be a negative moderator of the sales growth/employment growth relationship. We also hypothesize that resource scarcity will strengthen those relationships.\ud
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Growing profitable or growing from profits : putting the horse in front of the cart?
No full textTop lists of and praise for the economy's fastest growing firms abound in business media around the world. Similarly, in academic research there has been a tendency to equate firm growth with business success. This tendency appears to be particularly pronounced in-but not confined to entrepreneurship research.\ud
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In this study we critically examine this tendency to portray firm growth as more or less universally favorable. While several theories suggest that growth drives profitability we first show that the available empirical evidence does not support the existence of a general, positive relation ship between growth and profitability. Using the theoretical lens of the Resource-Based View (RBV) we then argue that sound growth usually starts with achieving sufficient levels of profitability. In summary, our theoretical argument is as follows: In a population of SMEs, superior profitability is likely to be indicative of having built a resource-based competitive advantage. Building such a valuable and hard to-copy advantage may at first constrain growth. However, the underlying advantage itself and the financial resources generated through high profitability make it possible for firms in this situation to now achieve sound and sustainable growth - which may require building a series of temporary advantages- without having to sacrifice profitability. By contrast, when firms strive for high growth starting from low profitability, the latter often indicates lack of competitive advantage. Therefore growth must be achieved in head-to-head competition with equally attractive alternatives, leading to profitability deterioration rather than improvement. In addition, these low profitability firms are unlikely to be able to finance strategies toward building valuable and difficult-to-imitate advantages while growing
Towards an integrative framework for future research on small firm growth
No full textOur review has demonstrated that small firm growth is a complex phenomenon. The concept ‘growth’ denotes both a change in amount and the process by which that change is attained. Further, the growth can be achieved in different ways and with varying degrees of regularity, and it manifests itself along several different dimensions such as sales, employment, and accumulation of assets. This complexity has naturally led researchers to adopt different approaches to studying growth and to use different measures to assess it. Further, although our review shows that it can fruitfully be regarded as a growth issue, the research on small firms' internationalization has largely developed as a separate stream. Similarly, other relatively separate literatures have evolved, which effectively focus on different modes of growth although mostly without regarding the studies first and foremost as growth studies. This goes for topics such as mergers and acquisitions, diversification, and integration - research streams which have largely ignored the particularities of small firms and which in turn have been largely ignored among researchers focusing on small firm growth
Performance configurations over time: implications for growth-and profit-oriented strategies
No full textEntrepreneurship research and practice places emphasis on company growth as a measure of entrepreneurial success. In many cases, there has been a tendency to give growth a very central role, with some researchers even seeing growth as the very essence of entrepreneurship (Cole, 1949; Sexton, 1997; Stevenson & Gumpert, 1991). A large number of empirical studies of the performance of young and/or small firms use growth as the dependent variable (see reviews by Ardishvili, Cardozo, Harmon, & Vadakath, 1998; Delmar, 1997; Wiklund, 1998). \ud
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By contrast, the two most prominent views of strategic management – strategic positioning (Porter, 1980) and the resource-based view (Barney, 1991; Wernerfelt, 1984) – are both concerned with achieving competitive advantage and regard achieving economic rents and profitability relative to other competitors as the central measures of firm performance. Strategic entrepreneurship integrates these two perspectives and is simultaneously concerned with opportunity seeking and advantage seeking (Hitt, Ireland, Camp, & Sexton, 2002; Ireland, Hitt, & Sirmon, 2003). Consequently, both company growth and relative profitability are together relevant measures of firm performance in the domain of strategic entrepreneurship
Conceptual and Empirical Challenges in the Study of Firm Growth
No full textWhen the first author reviewed the literature on small firm growth in the mid 1980’s for his disserta-tion work, he noted that surprisingly few studies had focused on that specific problem (Davidsson 1989a; 1989b). Today, this is no longer true. In recent years ever more comprehensive lists of studies have been compiled and reviewed. Storey (1994) compiled results from more than 25 studies. Delmar (1997) scrutinized the operationalizations of growth in 55 studies. The second author of the present manuscript recently reviewed and classified close to 70 studies for his dissertation work (Wiklund, 1998), while Ardishvili, Cardozo, Harmon & Vadakath (1998) included in their classification a full 105 published and unpublished studies focusing on new and/or small firm growth. \ud
However, rather than presenting a set of solid generalizations on the causes and effects of growth, these reviewers all tend to come up with relatively critical accounts. These criticisms concern both theoretical and methodological shortcomings. (Storey, 1994, p. 5; 125, Cooper, 1995, p. 120; Delmar (1997, pp. 205; 212; Wiklund, 1998, pp. 6-7; 19; Ardishvili et al, 1998, p. 1) \ud
In addition to the above evaluations of research specifically on growth, we also have the observation that longitudinal designs are generally lacking in entrepreneurship research (Cooper 1995, p. 112; Wik-lund 1998, p. 7). In the latest ‘State-of-the-Art’ volume, several authors mentioned the lack of longitu-dinal studies in entrepreneurship research as a major impediment (Aldrich & Baker, 1997, p. 389; Sex-ton, 1997, p. 407) \ud
As a result of the shortcomings pointed out by the critics, it is still true today that knowledge about what facilitates and hinders growth is still scattered and limited. The same is true for insights into the process of firm growth. Apparently, the large number of empirical studies has not given a very high yield of generalizable knowledge. This suggests that researchers who set out to contribute meaningfully to this line of empirical research have a number of challenges to deal with. On the basis of the criticism summarized above we would suggest that some of the more important challenges are the following:\ud
• to develop a satisfactory basic research design\ud
• to apply a well-founded conceptualization of growth, which in turn requires a well thought-out con-ceptualization of ‘the firm’\ud
• to adequately match this conceptualization with the purpose of the study, the theories used, and the operationalization of growth.\ud
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In the remainder of this chapter we will elaborate our views on these challenges. In the next section we will argue that growth studies need to be longitudinal, and why this is so. We will then turn to the conceptualization of the firm and the unit of analysis in growth studies, which turns out to be a really difficult problem. After that we discuss theoretical perspectives and how these match with different conceptualizations of the firm. Finally, we turn to operationalization issues, i.e. the choice of growth indicators, specific ways to model growth trajectories, and the distinction between organic and acquired growth. Throughout, we also discuss how these issues relate to different purposes, i.e. whose knowl-edge interests the study aims to satisfy
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