Firm-Growth and Functional Strategic Domains: Exploratory Evidence for Differences Between Frontier and Catching-Up Economies

Abstract

This paper explores the relationship between strategic functional domains and firm growth using the European Community Innovation Survey 2012. We provide a mapping of the joint effect of strategies on firm growth in frontier and catching-up economies. Methodologically, we explain employment growth in quantile regressions by estimating conditional coefficients across the distribution of firm-growth intensities. Firm growth in catching-up economies is to a lesser extent innovation-driven and focuses on diversifying geographically and establishing alliances. Firm growth in frontier economies is innovation-driven and tends to occur in existing markets. We thereby map the context-dependent role of strategies for firm growth and introduce yet unexplored topics like cost efficiency and organizational flexibility to the firm growth literature.

Keywords: Firm growth, Dynamic capabilities, Strategy Functions, Community Innovation Survey, Europe

JEL Classification: D22, L21, L25, L26