The purpose of this paper is to investigate the effect of a firm's growth strategy (specialization and diversification) and its specific resources, such as intangible assets and previous experience in the choice of growth method (organic or external).
The paper analyses 859 external growth arrangements and 1,057 cases of organic growth. A binomial logistic regression is used to test the hypotheses.
Results show that firms prefer to grow internally when their growth strategy is specialization, but prefer external growth methods – such as mergers, acquisitions and alliances – when their growth strategy is diversification and they have previous experience in these methods.
This study applies only to the European case and could be extended to Latin American companies for a comparative analysis.
This paper may help managers to identify important factors and issues to be considered when deciding upon a growth method. The European experience can be useful for Latin American companies following a similar growth strategy.
The results confirm a large part of the prior literature, but also go a stage further by including in the same study all the growth options available to a firm and providing empirical evidence of each one's preference according to the different situations analysed.
This paper has been supported by Project ECO2012-36775 of Spanish Ministry of Economy and Competitiveness (Spain).
Ortiz-de-Urbina-Criado, M., Ángel Guerras-Martín, L. and Montoro-Sánchez, Á. (2014), "The choice of growth method: strategies and resources", Academia Revista Latinoamericana de Administración, Vol. 27 No. 1, pp. 30-45. https://doi.org/10.1108/ARLA-07-2013-0094Download as .RIS
Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited