Growth Setbacks in New Firms

Centre for Technology Management (CTM) Working Paper, No. 2003/01

26 Pages Posted: 6 Sep 2011

See all articles by Elizabeth W. Garnsey

Elizabeth W. Garnsey

University of Cambridge - Judge Business School

Paul Heffernan

University of Cambridge - Centre for Technology Management

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 2003

Abstract

This paper examines setbacks in the early growth of new firms. Growth interruptions mark the unfolding, cumulative processes of firm growth overlooked in standard studies that use cross sectional methods. To probe for possible patterns in growth setbacks, we examined a cohort of 200 high technology firms founded in about 1990 and analysed the growth paths of survivors. Simple compression techniques yielded seven types of growth turning points. Growth setbacks are the norm even among firms with better growth records. Growth crises can be represented as a shift in phase state. To understand what such a shift implies, we focus on the micro-evidence relevant to processes of firm growth and illustrate growth crises from case studies. Growth crises represent both limits to knowledge and the means by which knowledge is revised and learning accelerated in the firm.

Keywords: Growth, setbacks,Cambridge, technology-based firms, employment, limits of knowledge, learning, cohort study, complex adaptive systems

JEL Classification: L10, L21, M13

Suggested Citation

Garnsey, Elizabeth W. and Heffernan, Paul, Growth Setbacks in New Firms (January 1, 2003). Centre for Technology Management (CTM) Working Paper, No. 2003/01, Available at SSRN: https://ssrn.com/abstract=1923138 or http://dx.doi.org/10.2139/ssrn.1923138

Elizabeth W. Garnsey (Contact Author)

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 (0) 1223 338183 (Phone)

HOME PAGE: http://www.jims.cam.ac.uk/people/faculty/garnseye.html

Paul Heffernan

University of Cambridge - Centre for Technology Management ( email )

Engineering Department
Trumpington Street
Cambridge, CB2 1PZ
United Kingdom
+44 (0)1223 338175 (Phone)
+44 (0)1223 766400 (Fax)

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