Entrepreneurial Narratives and the Dominant Logics of High-Growth Firms

Abstract

In order to study the way in which perceptions and beliefs of entrepreneurs affect continued growth of firms,the beliefs of entrepreneurial managers are examined using the resource-based view of the firm and its underlying cognitive propositions as theoretical support.The method of study is based on the assumption that open-ended narrative data about firm competencies, founder characteristics, corporate values, and future plans provide information about the mental models of a company's management. Narratives written by top CEOs or top management teams in 1994 and 1995 for the annual Entrepreneur of the Year Competition were selected for 54 firms, drawn from the Kauffman Foundation database of high-growth firms. The narratives were subjected to two rounds of content analysis. Six categories were used: (1) CEO characteristics, (2) company characteristics, (3) company capabilities, (4) growth strategies, (5) image of the market, and (6) other. Using prior theory and data, six growth strategies were identified: (1) growth through mergers, acquisitions, and expansion, (2) alliances and partnerships, (3) expansion, (4) new products or services, (5) expansion of labor and/or increasing employee’s capabilities, and (6) increasing earnings. Cluster analysis identified five categories of growth strategies: (1) expansion of products by continuous improvement, (2) market and product expansion, (3) dealing with capacity deficits, (4) anticipatory growth, and (5) scattered growth. The study revealed some of the commonalities among firms that share similar dominant logics. There are inter-industry patterns in the clustering of growth strategies that summarize the cognitive representations of management regarding firm expansion. These patterns are evidence of macro-level entrepreneurial knowledge with public policy and strategic implications.(TNM)

Keywords: Experimental/primary research, Individual traits, Cognitive maps, Ewing Marion Kauffman Foundation, Managers, Firm growth, Growth strategies, Cognitive theory