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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

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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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3669

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

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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

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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…

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. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1462-6004

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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. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1059-5422

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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

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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

Content available
Article
Publication date: 30 March 2021

Christina Öberg

This paper describes and discusses company spin-ins and spin-outs as a means to understand company growth in a dynamic context. The following question is asked: How can…

Abstract

Purpose

This paper describes and discusses company spin-ins and spin-outs as a means to understand company growth in a dynamic context. The following question is asked: How can growth be understood in spin-ins and spin-outs of innovative firms? The paper suggests return on capabilities as a measure to understand growth in an open innovation context.

Design/methodology/approach

The empirical part of the paper consists of a single case study. Data was captured through interviews and secondary data sources.

Findings

The paper points to that resources alone do not explain strategic decisions by a company and how spin-ins and spin-outs result from the need for capabilities, changes in business foci and temporary solutions to deal with overcapacities or lack of alternatives.

Originality/value

The paper contributes to research by discussing contemporary issues in strategy and innovation and relating them to the resource-based view and the growth of the firm. Spin-outs, and acquisitions and divestitures as interlinked events have rarely been focused on in the literature, while they remain frequent phenomena in practice.

Details

Journal of Organizational Change Management, vol. 34 no. 3
Type: Research Article
ISSN: 0953-4814

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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

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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

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Article
Publication date: 2 March 2020

Sanjay Bhattacharya, Kirankumar S. Momaya and K. Chandrasekhar Iyer

To suggest a conceptual framework to benchmark enablers of growth and link them to performance metrics, duly supported theoretically with definitions and literature…

Abstract

Purpose

To suggest a conceptual framework to benchmark enablers of growth and link them to performance metrics, duly supported theoretically with definitions and literature review. The sub-objectives of the study are the following:

  1. To identify enablers based on theories and antecedents of growth

  2. To establish key leads on how the identified enablers have been deployed by leading construction companies, basis their stages of growth and economic context

  3. To identify which enablers have higher potential to contribute to competitiveness and growth in an effort to benchmark performance

  4. To establish if the enablers deployed is dependent on the market maturity and economic context

To identify enablers based on theories and antecedents of growth

To establish key leads on how the identified enablers have been deployed by leading construction companies, basis their stages of growth and economic context

To identify which enablers have higher potential to contribute to competitiveness and growth in an effort to benchmark performance

To establish if the enablers deployed is dependent on the market maturity and economic context

Design/methodology/approach

The enabler-mix-based approach is evolved through literature review, inputs from industry practitioners, and subsequent empirical analysis. To explore relationships, the primary methodology suggested is building theory from practice, justified in specific industry and regional economic context. Content analysis has been used for validation of the framework.

Findings

Traditional strategy literature suffers from the limitations in terms of applicability and specific contextual settings. In a rapidly changing and varied environment coupled with the context of emerging countries, there is a need for a benchmarked framework for strategy and growth. The evidence toward utility of the framework has been established through a quick analysis of leading construction companies. Capabilities for “operational and process excellence,” “unique products and services,” and “visionary leadership” emerged to be the higher ranked core growth enablers. However, the deployment of these enablers is dependent on the maturity of the company and its economic context.

Research limitations/implications

This simpler and generic framework analyzes the relative impact on performance, as well as the inter-enabler interaction and substitution effects, in the context of construction companies.

Practical implications

In the context of industries that are volatile in nature (like the construction industry), strategy tools need to be simple and generic towards practical and uncomplicated application for the managers, to achieve positive outcomes.

Originality/value

This paper offers fresh perspectives to benchmarking literature in terms of enablers to deliver growth performance, in the context of construction companies. It attempts to fill the gap in evolving simple strategy tools to ensure sustainable growth performance in industries having nascent research support and less availability of data so far. In the context of industries that are volatile in nature (like the construction industry), strategy tools need to be simple and generic toward practical and uncomplicated application for the managers to achieve positive outcomes.

Details

Benchmarking: An International Journal, vol. 27 no. 4
Type: Research Article
ISSN: 1463-5771

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