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Article
Publication date: 1 January 2007

Jonathan Groucutt

By using the internet search engine Google™ as the primary example, this article illustrates: (1) that some high‐growth expectations are unsustainable over the short and…

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Abstract

Purpose

By using the internet search engine Google™ as the primary example, this article illustrates: (1) that some high‐growth expectations are unsustainable over the short and medium term; and (2) that dependency on single revenue streams may provide growth over the short term, but may not be sustainable over the medium and longer terms, and may be a high‐risk scenario. An approach is presented that companies can undertake to critically evaluate current and future positions and consider such options as acquisition and integration as a means of building future growth potential.

Design/methodology/approach

Secondary research based on the analysis of published data.

Findings

Dependency on one revenue stream within a volatile market can impact upon growth expectations. Hyper‐growth expectations may be unsustainable, indeed unrealistic, over the medium term. Such growth expectations may be detrimental to the company. Companies who can spread the risk through acquisition and integration through strategic fit may have greater longer‐term growth potential, notwithstanding market and environmental dynamics.

Research limitations/implications

Future opportunities for research could include, among other areas, how Google™ and similar online companies could use currently free products to generate revenues.

Practical implications

Companies need to consider the volatility of the marketplace. Dependency on one revenue stream could be a high‐risk scenario, especially in relation to sustainable high growth expectations. Companies also need to consider various strategic options for sustainable longer‐term growth, and continually critically review both internal and external environments, as well as product ranges and revenue streams. Companies should take action to sustain growth, whether that is through new market development, acquisition or even divestment.

Originality/value

While being flexible companies need to consider a realistic strategic direction for the business. Companies also need to consider realistic growth rates as compared to hyper‐growth expectations that are unlikely to be sustainable over the medium and longer term.

Details

Business Strategy Series, vol. 8 no. 1
Type: Research Article
ISSN: 1751-5637

Keywords

Article
Publication date: 1 December 2005

Vivek Kapur, Jeffere Ferris, John Juliano and Saul J. Berman

Growth is the top priority on the CEO agenda, but the question they confront is “What factors constrain growth?” And, “How do successful companies drive growth?”

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Abstract

Purpose

Growth is the top priority on the CEO agenda, but the question they confront is “What factors constrain growth?” And, “How do successful companies drive growth?”

Design/methodology/approach

IBM Institute for Business Value conducted a global study that focused on three questions: Who are the successful growers and what patterns are associated with them? What do successful growers do differently? How can other companies apply what they do?

Findings

The major finding were: that limits to growth are often self‐imposed and, as such, can be overcome; firms with the will to be successful growers can break free of perceived constraints related to size, industry boundaries and geographic neighborhood; and despite the widely held belief that mergers and acquisitions inherently destroy value for the acquirer, companies that learn to become successful growers use M&A strategies effectively.

Research limitations/implications

Looking at 1,238 Global S&P 1200 companies, the IBM team analyzed the patterns of revenue growth and shareholder value creation over the decade, segmenting results by four component geographies and 18 industry groups. It selected three industries (consumer products, telecom services and electronics) for detailed assessment, developing cases studies for about 20 companies in each industry, picked to represent a range of successful and unsuccessful results.

Practical implications

Winning the growth game requires companies to excel in three vital areas: course, capability and conviction. Successful growers set the right growth direction – the course – by forming a clear point of view on the future, evolving the product‐market portfolio without being limited by history, building a competitive model to win and pursuing reinforcing initiatives to sustain growth. They truly understand their capabilities – based on realistic assessments of their strengths and limitations – and evolve their operational model to support the growth strategy. Finally, while many companies develop excellent plans, truly successful growers build organization‐wide conviction that translates intent into action for everyone from top leaders to front line managers.

Originality/value

The message is clear: neighborhood is not destiny. Executives have more room to be ambitious than they tend to believe. Winning companies set ambitious growth plans regardless of industry or geographic “limits.” They aim for targets above and beyond what they and their peers typically expect.

Details

Strategy & Leadership, vol. 33 no. 6
Type: Research Article
ISSN: 1087-8572

Keywords

Article
Publication date: 1 January 1970

Peter Hart and John Mellors

THE purpose of this paper is to examine the ways in which managerial ages may affect a company's growth rate. A brief discussion of the possible links between age of…

Abstract

THE purpose of this paper is to examine the ways in which managerial ages may affect a company's growth rate. A brief discussion of the possible links between age of management and company growth is followed by presentation of the results of an empirical investigation of four UK Industries and fifty large US corporations.

Details

Management Decision, vol. 4 no. 1
Type: Research Article
ISSN: 0025-1747

Book part
Publication date: 1 December 2004

M.Ameziane Lasfer

I test empirically the hypothesis that the monitoring role of the board of directors depends on the severity of the agency problems and the amount of information needed to…

Abstract

I test empirically the hypothesis that the monitoring role of the board of directors depends on the severity of the agency problems and the amount of information needed to monitor. I show that in high growth firms, where the agency conflicts are low and managers are likely to reveal more information to get advice, boards are more independent but less likely to monitor, while in low growth firms, boards are less likely to be independent, but the relationship between firm value and board independence is strong. Overall, boards become more independent but monitor less as firms’ growth opportunities increase, suggesting that managers trade off the amount of information released to the board to get a better advice and to mitigate the monitoring role of the board.

Details

Corporate Governance
Type: Book
ISBN: 978-0-76231-133-0

Book part
Publication date: 4 August 2015

Richard DeMartino, Rajendran Sriramachandramurthy, Joseph C. Miller and John N. Angelis

Despite a large and growing literature on the subject, little is understood about the phenomenon of small business growth. Specifically, the small business growth

Abstract

Despite a large and growing literature on the subject, little is understood about the phenomenon of small business growth. Specifically, the small business growth literature has often emphasized “why” opposed to “how” firms grow. This chapter sheds light on this black box of growth by investigating the phases of planning and implementation processes separately to explore the choice of strategic expansion modes. It examines a much under-researched firm category: declining small firms. Employing a three-year longitudinal study using a multi-case study method, we find that while growth approaches are typically contextually (industry) derived, formalized planning greatly affects implementation. Further, resources are the key mediating variable between formal planning and implementation – firms with slack resources will typically implement their contextually influenced planned growth course, and firms with inadequate resources will typically implement through interactive learning, which causes them to downscale the growth plans or exit the market (merger or sale).

Details

Entrepreneurial Growth: Individual, Firm, and Region
Type: Book
ISBN: 978-1-78560-047-0

Keywords

Article
Publication date: 22 December 2021

This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.

188

Abstract

Purpose

This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.

Design/methodology/approach

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

Findings

This research paper concentrates on the relationship between company growth and digitalization, as measured in six growth companies in Finland. Growth was compartmentalized into three phases: pre-factors of growth, growth as a process, and growth as an outcome. Maintaining strategic flexibility powerfully facilitates digitalization. The companies generally integrated digitalization into the processes they built, creating a product and service platform from which they could reliably scale. Leaders in digital product-driven companies are encouraged by the study's authors to invest in and promote a culture of continual learning, so that their teams don't lose their instinct to keep innovating to achieve competitive advantages.

Originality/value

The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Details

Strategic Direction, vol. 38 no. 2
Type: Research Article
ISSN: 0258-0543

Keywords

Article
Publication date: 1 February 2005

David Meer

To explore the challenges associated with organic growth, outline three requirements for growing faster than the competition and evaluate the recent trend toward the

2205

Abstract

Purpose

To explore the challenges associated with organic growth, outline three requirements for growing faster than the competition and evaluate the recent trend toward the establishment of a new executive position: “chief growth officer.”

Design/methodology/approach

The article is based on an organic growth study examining the performance of 107 “non‐acquisitive” companies (those with no major acquisitions between 1996 and 2000). It then looked more closely at companies identified as “growth leaders” to isolate the best practices that set them apart from their peers.

Findings

Research into corporate performance over the long term indicates that organic growth is the most important driver of value in the capital markets. Yet sustained organic growth is difficult to achieve. The article identifies common organizational barriers to growth and reveals three best practices of companies that consistently achieve organic growth faster than competitors. These three practices are: a more disciplined approach to growth, better organizational capabilities for driving growth and a more supportive culture. Finally, the article reviews the performance of companies that have appointed chief growth officers as a means to kick‐start growth.

Originality/value

This paper addresses an issue at the top of nearly every corporate agenda – organic growth. It also delivers a key message to companies looking to achieve their growth objectives by creating a new CGO position: strong, value‐enhancing revenue increases require wholesale changes in behaviors, capabilities and culture, not just a new box on the organizational chart.

Details

Journal of Business Strategy, vol. 26 no. 1
Type: Research Article
ISSN: 0275-6668

Keywords

Article
Publication date: 5 July 2021

Vladislav Spitsin, Darko B. Vukovic, Lubov Spitsina and Mustafa Özer

The purpose of this paper is to investigate the joint influence of two factors (companies’ performance and growth) on the company’s capital structure and to determine the…

Abstract

Purpose

The purpose of this paper is to investigate the joint influence of two factors (companies’ performance and growth) on the company’s capital structure and to determine the conditions for financially sustainable competitive strategies in the coordinates profitability and growth.

Design/methodology/approach

The study sample includes 1,996 companies from 6 high-tech industries in Russia (panel data: 7,984 observations). The authors use regression models with random effects and carry out a three-dimensional visualization of the resulting dependencies.

Findings

The study found that profitability improves the capital structure (reduces the share of borrowed capital) and, on the contrary, the growth of companies (assets growth or sales growth) increases the leverage ratio. In the case of assets growth, the combined influence of two factors reduces the negative effect of assets growth. The results have shown that the outstripping growth of most high-tech companies requires an increase in debt capital and deterioration in the capital structure and financial stability.

Practical implications

In general, based on the results of this study, the authors have identified groups of fast-growing companies that need financial support, and have defined the main areas of impact (reducing the loan burden and increasing profitability) that will allow these companies to maintain high growth rates and demonstrate advanced development.

Originality/value

The relationships (which the authors identified between the control variables, the studied variables and leverage) were obtained for the first time for a sample of companies in high-tech industries and services in bigger transition country (Russia).

Details

Competitiveness Review: An International Business Journal , vol. 32 no. 6
Type: Research Article
ISSN: 1059-5422

Keywords

Article
Publication date: 22 October 2021

Marko Juhani Matalamäki and Sanna Joensuu-Salo

This paper examines how digitalization can affect three aspects of firm growth. The specific objectives are as follows: (1) to increase understanding of how digitalization…

1507

Abstract

Purpose

This paper examines how digitalization can affect three aspects of firm growth. The specific objectives are as follows: (1) to increase understanding of how digitalization affects pre-factors for growth, (2) to examine how digitalization transforms the growth process, especially growth strategies and (3) to examine how digitalization is apparent in the outcome of growth.

Design/methodology/approach

We explore six Finnish growth companies in order to understand the relationship between digitalization and growth. We used qualitative data collection and the Digimat measurement test for analyzing patterns, themes and best practices to generate a deeper understanding of the impact of digital technologies on business growth and growth strategies in these companies.

Findings

We propose that business growth includes three aspects of growth: pre-factors of growth, growth as a process and growth as an outcome. Digitalization may affect all of these aspects and strategic flexibility can affect business growth. Digitalization and strategic flexibility are intertwined; strategic flexibility enables the application of new technology, and digitalization enables flexibility.

Practical implications

Building on the results of the case studies, this research identifies relationships between digitalization, business growth and strategic flexibility.

Originality/value

This paper contributes to the growing literature on digitalization, providing new insight into its relation to business growth.

Details

Journal of Small Business and Enterprise Development, vol. 29 no. 3
Type: Research Article
ISSN: 1462-6004

Keywords

Article
Publication date: 22 June 2010

Paulo Maçãs Nunes, Zélia Serrasqueiro, Luis Mendes and Tiago Neves Sequeira

The purpose of this paper is to determine if the relationship between growth and research and development (R&D) intensity is of a different nature in the context of low…

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Abstract

Purpose

The purpose of this paper is to determine if the relationship between growth and research and development (R&D) intensity is of a different nature in the context of low‐ and high‐tech Portuguese service small to medium‐sized enterprises (SMEs).

Design/methodology/approach

The System Analysis of Iberian Balance Sheets database is used. Based on the European Union's recommendation, L124/36 (2003/261/CE), the authors select 764 low‐tech and 139 high‐tech Portuguese service SMEs for the period 1999‐2006. As method of analysis, panel data are used.

Findings

A negative relationship between growth and R&D intensity for low‐tech Portuguese service SMEs is identified, whatever the level of R&D intensity. For high‐tech Portuguese service SMEs, a quadratic U‐shaped relationship between growth and R&D intensity is identified. Moreover, the authors find that relationships between growth and determinants are of a special nature in the context of high‐tech Portuguese service SMEs with high levels of R&D intensity.

Practical implications

It is recommended that as far as possible the managers/owners of low‐tech Portuguese service SMEs, and especially high‐tech ones with non‐high levels of R&D intensity, hire qualified human resources and make more continuous investment in R&D. The authors advise managers/owners of high‐tech Portuguese service SMEs with high levels of R&D intensity to establish stable relationships with creditors. Policy‐makers should increase financial support directed, above all, to innovative Portuguese service SMEs.

Originality/value

The paper is pioneering in presenting different relationships between growth and R&D intensity in the context of low‐ and high‐tech service SMEs.

Details

Journal of Service Management, vol. 21 no. 3
Type: Research Article
ISSN: 1757-5818

Keywords

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