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  • Print publication year: 2019
  • Online publication date: June 2019

6 - Growth of High-tech Start-ups

Summary

Introduction

In this chapter, we discuss in detail the factors that influence the growth of high-tech start-ups in India. We will be specifically examining the growth of the start-ups based on three vital aspects, namely, the entrepreneur-specific factors that contribute to the growth of high-tech start-ups, the firm-specific factors that impact the growth of high-tech start-ups, and last, the external environment-specific factors that influence the growth of high-tech start-ups. We study the factors impacting growth of start-ups by grouping our sample of start-ups into two distinct categories – start-ups that have survived but not yet growing and start-ups that are growing. We then perform logistic regression analysis to understand the key factors that are responsible for growth of the high-tech start-ups in the sample.

Growth of firms has been researched extensively in the past, and even as high-tech firms emerged in the 1980s and onwards, there has been analysis of factors that influence and impact growth of these categories of firms as well. The initial key contributions to examination of firm growth can be traced back to Penrose (1959) and Stinchcombe (1965). They provided the perspective that a firm's growth pattern is dependent on its age, size, and industry affiliation. However, these were theoretical contributions only. A few decades later, scholars such as Collins and Porras (1994), Gundry and Welsch (2001), and Kirchhoff (1994) tried to provide empirical evidence to the aforementioned theoretical work but ended with different results and interpretations of growth of firms and the factors influencing the same.

Delmar, Davidsson, and Gartner (2003) observed that this substantial heterogeneity in the results was due to usage of different growth measures in their corresponding studies, and hence these results cumulatively could not help us comprehensively understand the phenomenon of growth in firms’ life cycle. After evaluating multiple firm growth measures prior to their work, they concluded that there was no single best way to measure firm growth, and that all high-growth firms do not grow in the same way. Hence, they suggested that researchers use the appropriate measure of growth that suited their approach of study, and also mentioned that the findings of such work to be restricted to enhancing knowledge, related to the theoretical stream of organizational growth.