Small Firm Growth

100 Pages Posted: 15 Jun 2010

See all articles by Per Davidsson

Per Davidsson

Queensland University of Technology - Brisbane Graduate School of Business

Leona Achtenhagen

Jonkoping University - Jonkoping International Business School (JIBS)

Lucia Naldi

Jonkoping University - Jonkoping International Business School (JIBS)

Date Written: June 15, 2010

Abstract

We review and discuss the literature on small firm growth with an intention to provide a useful vantage point for new research studies regarding this important phenomenon. We first discuss conceptual and methodological issues that represent critical choices for those who research growth and which make it challenging to compare results from previous studies. The substantial review of past research is organized into four sections representing two smaller and two larger literatures. The first of the latter focuses on internal and external drivers of small firm growth. Here we find that much has been learnt and that many valuable generalizations can be made. However, we also conclude that more research of the same kind is unlikely to yield much. While interactive and non-linear effects may be worth pursuing it is unlikely that any new and important growth drivers or strong, linear main effects would be found. The second 'large' literature deals with organizational life-cycles or stages of development. While deservedly criticized for unwarranted determinism and weak empirics this type of approach addresses problems of high practical and also theoretical relevance, and should not be shunned by researchers. We argue that with a change in the fundamental assumptions and improved empirical design, research on the organizational and managerial consequences of growth is an important line of inquiry. With this, we overlap with one of the 'smaller' literatures, namely studies focusing on the effects of growth. We argue that studies too often assume that growth equals success. We advocate instead the use of growth as an intermediary variable that influences more fundamental goals in ways that should be carefully examined rather than assumed. The second 'small' literature distinguishes between different modes or forms of growth, including, e.g., organic vs. acquisition-based growth, and international expansion. We note that modes of growth is an important topic that has been under-studied in the growth literature, whereas in other branches of research aspects of it may have been studied intensely, but not primarily from a growth perspective. In the final section we elaborate on ways forward for research on small firm growth. We point at rich opportunities for researchers who look beyond drivers of growth, where growth is viewed as a homogenous phenomenon assumed to unambiguously reflect success, and instead focus on growth as a process and a multi-dimensional phenomenon, as well as on how growth relates to more fundamental outcomes.

Keywords: Small Firm Growth, Organizational Life-Cycle, Growth Strategies

JEL Classification: L26, M13, L1

Suggested Citation

Davidsson, Per and Achtenhagen, Leona and Naldi, Lucia, Small Firm Growth (June 15, 2010). Foundations and Trends in Entrepreneurship, Vol. 6, No. 2, pp 69-166, 2010. Available at SSRN: https://ssrn.com/abstract=1625327

Per Davidsson (Contact Author)

Queensland University of Technology - Brisbane Graduate School of Business ( email )

Brisbane
Australia
+61 7 3864 2051 (Phone)
+61 7 3864 1299 (Fax)

HOME PAGE: http://www.qut.edu.au/ph_server_query.do

Leona Achtenhagen

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Lucia Naldi

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

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