Skip to main content Accessibility help
×
Home

Forms of growth: How SMEs combine forms of growth to achieve high growth

  • Jose Luis Barbero Navarro (a1), Jose Carlos Casillas (a2) and Bruce Barringer (a3)

Abstract

The majority of the literature on high-growth firms focuses on two main aspects: growth factors and rates of growth, but little information exists on how SMEs grow. Past research has implicitly considered high-growth firms as a homogeneous category of businesses, however, in reality, they use different forms of growth: domestic and international geographical expansion, the launch of new related and unrelated products, product improvement, client retention and the acquisition of new clients. This work attempts to identify how high-growth SMEs benefit from different combinations of forms of growth to perform successfully. A sample of 89 high-growth SMEs was selected – with an annual growth rate of more than 10% over a 5-year period – and, by means of a cluster analysis, we found four significantly different combinations of forms of growth. To externally test the robustness of those combinations, a group of demographic variables was considered (size, age, sector), as well as a set of variables related to the growth strategy (personnel involvement, the extent to which growth is a priority, perceived growth with respect to competitors), which support the existence of significant differences between the groups.

Copyright

References

Hide All
Achtenhagen, L., Naldi, L., & Melin, L. (2010). ‘Business growth’ – Do practitioners and scholars really talk about the same thing? Entrepreneurship: Theory and Practice, 34(2), 289316.
Acs, Z. J., & Armington, C. (2006). Entrepreneurship, geography and American economic growth. New York: Cambridge University Press.
Acs, Z. J., & Mueller, P. (2008). Employment effects of business dynamics: Mice, gazelles and elephants. Small Business Economics, 30(1), 85100.
Andrews, K. R. (1987). The concept of corporate strategy. Burr Ridge, IL: Irwin.
Ansoff, H. I. (1957). Corporate strategy. New York: McGraw Hill.
Arnold, T. J., Fang, E., & Palmatier, R. W. (2010). The effects of customer acquisition and retention orientations on a firm's radical and incremental innovation performance. Journal of the Academy of Marketing Science, 39(2), 234251.
Baghai, M., Coley, S., & White, D. (1999). The alchemy of growth. Practical insightsfor building the enduring enterprise. New York: Basic Books.
Barkham, R. J. (1994). Entrepreneurial characteristics and the size of the new firm: A model and an econometric test. Small Business Economics, 6(2), 117125.
Barringer, B., & Greening, D. (1998). Small business growth through geographic expansion: A comparative case study. Journal of Business Venturing, 13(6), 467492.
Barringer, B., & Ireland, D. (2008). Entrepreneurship: Successfully launching new ventures. Upper Saddle River, NJ: Pearson Education.
Barringer, B., Jones, F., & Neubaum, D. (2005). A quantitative content analysis of the characteristics of rapid growth firms and their founders. Journal of Business Venturing, 20(5), 663687.
Baysinger, B. D., Meiners, R. E., & Zeithaml, C. P. (1982). Barriers to corporate growth. Lexington, MA: Lexington Books.
Birch, D. (1979). The job generating process. MIT Program on Neighborhood and Regional Change. Cambridge, MA: MIT.
Birch, D. (1987). Job creation in America: How our smallest companies put the most people to work. New York: Free Press.
Birch, D. (1989). Change, innovation, and job generation. Journal of Labour Research, 10(1), 3339.
Birch, D. L., & Medoff, J. (1994). Gazelles. In Solmon, L. C. & Levenson, A. R. (Eds.), Labor markets, employment policy and job creation (pp. 159167). Boulder, CO: Westview Press.
Bourgeois, L. J. (1980). Strategy and environment: A concept integration. Academy of Management Review, 5(1), 2539.
Busija, E. C., O'Neill, H. M., & Zeithaml, C. P. (1997). Diversification strategy, entry mode, and performance: Evidence of choices and constraints. Strategic Management Journal, 18(4), 321327.
Calori, R., Leif, M., Tugrul, A., & Gustavsson, P. (2000). Innovative international strategies. Journal of World Business, 35(4), 333354.
Cantwell, J., & Mudambi, R. (2005). MNE competence creating subsidiary mandates. Strategic Management Journal, 26(12), 11091128.
Collis, D., & Montgomery, C. (1998). Creating corporate advantage. Harvard Business Review, 76(3), 7083.
Covin, J. G., & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1), 7587.
Cusumano, M., & Von Krogh, G. (2001). Three strategies for managing fast growth. MIT Sloan Management Review, 42(2), 5362.
Davidsson, P., & Delmar, F. (1997). High-growth firms and their contribution to employment: The case of Sweden 1987-96. Paris: OECD Working Paper on SMEs.
Davidsson, P., & Wiklund, J. (2000). Conceptual and empirical challenges in the study of firm growth. In Sexton, D. L. & Landström, H. (Eds.). Handbook of entrepreneurship. Malden, MA: Blackwell Publishers.
Delios, A., Xu, D., & Beamish, P. (2008). Within country product diversification and foreign subsidiary performance. Journal of International Business Studies, 39(4), 706724.
Delmar, F. (1997). Measuring growth: Methodological considerations and empirical results. In Donckels, R. & Miettinen, A. (Eds.), Entrepreneurship and SME research: On its way to the new millennium (pp. 199216). Aldershot, UK: Ashgate.
Delmar, F., & Davidsson, P. (1998). A taxonomy of high growth firms. Frontiers of entrepreneurship research. Wellesley, MA. Babson College.
Delmar, F., Davidsson, P., & Gartner, W. (2003). Arriving at the high-growth firm. Journal of Business Venturing, 18(2), 189216.
Delmar, F., & Wiklund, J. (2008). The effect of small business managers' growth motivation on firm growth: A longitudinal study. Entrepreneurship: Theory and Practice, 32(3), 437457.
Dobbs, M., & Hamilton, R. T. (2007). Small business growth: Recent evidence and new directions. International Journal of Entrepreneurial Behaviour and Research, 13(5), 296322.
Doorley, T., & Donovan, J. (1999). Value creating growth: How to lift your company to the next level of performance. San Francisco, CA: Jossey-Bass.
Dunne, P. & Hughes, A. (1996). Age, size, growth and survival: UK companies in the 1980's. Journal of Industrial Economics, 42, 115140.
Evans, D. (1987). Tests of alternative theory of firm growth. Journal of Political Economy, 95(4), 657674.
Fang, Y., Wade, M., Delios, A., & Beamish, P. (2007). International diversification, subsidiary performance and the mobility of knowledge resources. Strategic Management Journal, 28(10), 10531064.
Frost, T. (2001). The geographic sources of foreign subsidiaries innovations. Strategic Management Journal, 22(2), 101123.
Gibrat, R. (1931). Les inequalites economiques. Paris: Libraire du Recueil Sirey.
Gilbert, B. A., McDougal, P. P., & Audretsch, D. B. (2006). New venture growth: A review and extension. Journal of Management, 32(6), 926950.
Hair, J. F., Anderson, R. E., Tatham, R. L., & William, C. B. (1995). Multivariate data analysis with readings. Englewood Cliffs, NJ: Prentice-Hall
Henrekson, M., & Johansson, D. (2010). Gazelles as job creators: A survey and interpretation of the evidence. Small Business Economics, 35(2), 227244.
Hofstede, G. H. (1980). Cultures consequences: International differences in work-related values. Beverly Hills, CA: Sage.
Kerlinger, F. N. (1986) Foundations of behavioural research. New York: Holt, Rinehart and Winston
King, S., & Burgess, T. (2008). Understanding success and failure in customer relationship management. Industrial Marketing Management, 37, 421431.
Knight, T., & Cavusgil, G. (2004). Innovation, organisational capabilities, and the born global firm. Journal of International Business Studies, 35(2), 124141.
Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3), 411432.
Kotler, P., (2000). Marketing management, the millennium edition. London: Prentice Hall.
Lafontaine, F., & Shaw, K. (1998). Franchising growth and franchisor entry and exit in the U.S. Market: myth and reality. Journal of Business Venturing, 13(2), 95112.
Lash, F., Le Roy, F., & Yami, S. (2007). Critical growth factors for ICT start ups. Management Decision, 45(1), 6275.
Leonard-Barton, D. (1992). Core capabilities and core rigidities: A paradox in managing new product development. Strategic Management Journal, 13(5), 111125.
Levie, J. (1995). Strategies for new venture growth and harvest: A five year follow-up of 176 young growing firms in Denmark, Ireland and Scotland. Babson College Entrepreneurship Research Conference ‘Frontiers of Entrepreneurship Research’. Wellesley, MA: Babson College.
Little, S. (2005) The seven irrefutable rules of small business growth. Hoboken, NJ: Wiley.
Littunen, H., & Tohmo, T. (2003). The high growth in new metal-based manufacturing and business service firms in Finland. Small Business Economics, 21(2), 187200.
Lu, J., & Beamish, P. (2006). Partnering strategies and performance of SMEs in international joint ventures. Journal of Business Venturing, 21(4), 461486.
Lynn, M., & Reinsch, L. (1990). Diversification patterns among small businesses. Journal Small Business Management, 28(4), 6070.
Mangelsdorf, M. E. (1996). The startling truth about growth companies. Inc, 18(7), 8492.
McDougall, P., Covin, J., Robinson, R., & Herron, L. (1994). The effects of industry growth and strategic breadth on new venture performance and strategy content. Strategic Management Journal, 15(7), 537554.
McKelvie, A., & Wiklund, J. (2010). Advancing firm growth research: A focus on growth mode instead of growth rate. Entrepreneurship: Theory and Practice, 34(2), 261288.
Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29(7), 770791.
Moreno, A. M., & Casillas, J. C. (2007). High-growth SMEs versus non-high growth SMEs: A discriminant analysis. Entrepreneurship and Regional Development, 19(1), 6988.
Moreno, A. M., & Casillas, J. C. (2008). Entrepreneurial orientation and growth of SMEs. A causal model. Entrepreneurship Theory and Practice, 32(8), 507528.
Ostgaard, T., & Birley, S. (1996). New venture growth and personal networks. Journal of Business Research, 36(1), 3550.
Penrose, E. (1959). The theory of growth of the mode. Oxford, UK: Blackwell.
Perry, C. (1987). Growth strategies for small firms: Principles and case studies. International Small Business Journal, 5(2), 1725.
Pettus, M. (2001). The resource based view as a developmental growth process: Evidence from the deregulated trucking industry. Academy of Management Journal, 44(4), 876896.
Phene, A., Fladmoe-Lindquist, K., & Marsh, L. (2006). Breakthrough innovations in the U.S. Biotechnology industry: The effects of technological space and geographic origin. Strategic Management Journal, 27(4), 369388.
Podsakoff, P. M., & Organ, D. W. (1986). Self-reports in organizational research: Problems and prospects. Journal of Management, 12(2), 531544.
Prater, E., & Ghosh, S. (2005). Current operational practices of U.S. small and medium sized enterprises in Europe. Journal of Small Business Management, 43(2), 155169.
Robinson, K. (1998). An examination of the influence of industry structure on eight alternative measures of new venture performance for high potential independent new ventures. Journal of Business Venturing, 14(2), 165187.
Rosenbusch, N., Brinckmann, J., & Bausch, A. (2011). Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs. Journal of Business Venturing, 26(4), 441457.
Ruiz-Ortega, M. J., & Garcia-Villaverde, P. M. (2008). Capabilities and competitive tactics influences on performance: Implications of the moment of entry. Journal of Business Research, 61(4), 332345.
Sexton, D., & Bowman-Upton, N. (1991). Entrepreneurship: Creativity and growth. New York: Macmillan.
Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217226.
Shepherd, D., & Wiklund, J. (2009). Are we comparing apples with apples or apples with oranges? Appropriateness of knowledge accumulation across growth studies. Entrepreneurship: Theory and Practice, 33(1), 105123.
Short, J. C., Payne, G. T., & Ketchen, D. J. (2008). Research on organisational configurations: Past accomplishments and future challenges. Journal of Management, 34(6), 10531079.
Siegel, R., Siegel, E., & MacMillan, I. (1993). Characteristics distinguishing high-growth ventures. Journal of Business Venturing, 8(2), 169180.
Stam, E. (2010). Growth beyond Gibrat: Firm growth processes and strategies. Small Business Economics, 35(2), 129135.
Stevenson, H. H., & Jarillo, J. C. (1990). A paradigm of entrepreneurship: Entrepreneurial management. Strategic Management Journal, 11, 1727.
Stuart, T., & Podolny, J. (1996). Local search and the evolution of technological capabilities. Strategic Management Journal, Summer Special Issue, 17, 2138.
Teece, D. (1982). Towards an economic theory of multiproduct firm. Journal of Economic Behavior and Organization, 3(1), 3963.
Treacy, M. (2003). Double Digit Growth. How great companies achieve it. New York: Portfolio.
Voss, G., & Giraud, Z. (2008). Competitive density and the customer acquisition retention trade off. Journal of Marketing, 72(6), 318.
Voss, G., Montoya-Weiss, M., & Giraud, Z. (2006). Aligning innovation with market characteristics in the nonprofit professional theatre industry. Journal of Marketing Research, 43(2), 296302.
Weinzimmer, L. G., Nystrom, P. C., & Freeman, S. J. (1998). Measuring organizational growth: Issues, consequences and guidelines. Journal of Management, 24(2), 235262.
Wiklund, J., Palzelt, A. H., & Shepherd, D. A. (2009). Building an integrative model of small business growth. Small Business Economics, 32(4), 351374
Wiklund, J., & Shepherd, D. (2003). Knowledge-based resources, entrepreneurial orientation and the performance of small and medium-sized businesses. Strategic Management Journal, 24(10), 13071314.
Wind, J. (2005). Marketing as an engine of business growth. Journal of Business Research, 58(7), 863873.
Wirtz, B., & Lihotzky, N. (2003). Customer retention management in the B2C electronic business. Long Range Planning, 36(6), 517532.
Zablah, A., Bellenger, D., & Johnston, W (2004). An evaluation of divergent perspectives on customer relationship management: Towards a common understanding of an emerging phenomenon. Industrial Marketing Management, 33(6), 475489.

Keywords

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed