Determinants and Dimensions of Firm Growth
SCALES EIM Research Reports (H200903)
34 Pages Posted: 6 Aug 2009
Date Written: February 12, 2009
Abstract
Firm growth is an important indicator of a thriving economy. Although the determinants of firm growth have been studied in various disciplines, an integrated analysis is still lacking. This paper attempts to provide such an analysis. Many determinants of firm growth are summarized and classified into three dimensions: individual, organizational, and environmental determinants. By conducting an empirical study using 523 Dutch small and medium sized firms, we identify the determinants of firm growth which is measured by employment growth. Our findings show that environmental determinants do not affect firm growth. Individual ones do: entrepreneurs with growth motivation and having technical knowledge are more likely to grow their firms while entrepreneurs characterized by a strong need of achievement are less likely to engage in firm growth. Organizational determinants have the most influence on firm growth: the older the firm, the less likely it is to grow. Availability of financial capital is found to be crucial to firm growth. Finally, the firm’s scalability (its preparedness to grow) is found to have a positive impact on firm growth.
Keywords: SMEs, firm growth, integrated analysis, individual determinants, organizational determinants, environmental determinants, conceptual approach, statistical approach
JEL Classification: L25, L11
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
By Per Davidsson, Leona Achtenhagen, ...
-
Aspiring for, and Achieving Growth: The Moderating Role of Resources and Opportunities
By Johan Wiklund and Dean Shepherd
-
The Effect of Small Business Managers Growth Motivation on Firm Growth: A Longitudinal Study
By Frédéric Delmar and Johan Wiklund
-
Growing Profitable or Growing from Profits: Putting the Horse in Front of the Cart?
By Per Davidsson, Paul Steffens, ...
-
Organic and Acquisitive Growth: Re-Examining, Testing and Extending Penrose's Growth Theory
By Andy Lockett, Johan Wiklund, ...
-
Growth, Corporate Profitability, and Shareholder Value Creation
By Cyrus A. Ramezani, Luc A. Soenen, ...
-
Scale Barriers and Growth Opportunities: A Resource-Based Model of New Venture Expansion