Search results

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Book part
Publication date: 3 July 2018

Peggy Cunningham

The primary purpose of this chapter is to provide insight as to why some privately held small-to-medium sized firms (SMEs) have been able to outperform their peers in terms of…

Abstract

Purpose

The primary purpose of this chapter is to provide insight as to why some privately held small-to-medium sized firms (SMEs) have been able to outperform their peers in terms of their performance defined as revenue growth, profit growth, growth in number of employees and markets. Little is known about privately held firms and what drives their performance. The second purpose is to synthesize and provide clarity to the extant literature on rapid-growth SMEs (gazelles). The third purpose is to bring a unifying theoretical lens to the literature.

Methodology

The research was conducted using elite interviews with 47 informants drawn from 21 rapid-growth, private companies. Qualitative methods were used to identify themes related to the strategies used by these firms to outperform their peers over a five-year period.

Findings

The study organizes and summarizes the extant literature on rapid-growth companies, provides support for some findings, and clarifies equivocal findings. It also suggests that early strategic choices made by the owners of private firms along with their attitudes and capabilities positioned the private firms for rapid growth. The Morgan and Hunt (1994) trust–commitment theory of relationship marketing emerged from the data as the model used most often by rapid-growth private firms and the one that best integrates the factors driving private firm performance. A modified, two-stage model appears to be warranted. The first stage focuses on respect for the value employees bring, and building their trust and commitment is an essential first step that subsequently drives the second stage of the model – building customer trust and commitment. While some of the outcomes are similar to those suggested by Morgan and Hunt, new outcomes (collaborative innovation, citizenship behaviors, sustained growth, and premium prices) also emerged as important outcomes in this study.

Practical implications

This study provides owners of private firms with insight on how to build and grow their firms in a rapid and sustainable fashion.

Originality/value

Little research has been undertaken on private firms. This study addresses this knowledge gap. The modified trust–commitment relationship marketing model that emerged from the data had not been utilized to date in the field of rapid-growth firms and it provides an integrating theory that explains the performance of rapid-growth private firms.

Article
Publication date: 24 October 2008

Yuli Zhang, Xiaofei Yang and Fengling Ma

This study aims to compare rapid‐growth companies with slow‐growth ones in order to provide fresh insights into the attributes of Chinese rapid‐growth companies through an…

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Abstract

Purpose

This study aims to compare rapid‐growth companies with slow‐growth ones in order to provide fresh insights into the attributes of Chinese rapid‐growth companies through an integrated research framework, which was adapted from the framework proposed by Wiklund and by Barringer.

Design/methodology/approach

To obtain data for analysis, the research selected the top 30 rapid‐growth firms and the bottom 30 slow‐growth firms from a data bank which contains complete financial data of 533 firms from 2001 to 2003. All data concerning rapid‐growth were coded either one or zero, and were analyzed by Fisher's Exact Test to find out the frequency of important growth variables.

Findings

It is found that the major differences between rapid‐growth and slow‐growth firms lie in different favorite firm resources and capacities, task environment, and entrepreneurial strategies. They can create greater value for success with certain entrepreneurs, and might spur those entrepreneurs to push their firms onto a rapid growth road. In addition, the variable of creating unique value emerges as a strong predictor of rapid growth. Entrepreneur orientation strategy is not found to be significantly facilitating rapid growth. This illustrates that all growth companies value highly entrepreneurship‐oriented strategy.

Practical implications

These research findings confirm that growth is not a random event and that entrepreneurs are not necessarily natural. These research findings will promote entrepreneurship education and entrepreneurship in China.

Originality/value

There are two originalities in this research. First, the authors developed a new integrated framework based on previous research achievements. Second, it is the first empirical study concerning company growth variables in China.

Details

Journal of Small Business and Enterprise Development, vol. 15 no. 4
Type: Research Article
ISSN: 1462-6004

Keywords

Article
Publication date: 19 December 2023

Rachael E. Rees-Jones, Ross Brown and Dylan Jones-Evans

Research on high growth firms is booming yet a strong conceptual understanding of how these firms obtain (and sustain) rapid growth remains (at best) partial. The main purpose of…

Abstract

Purpose

Research on high growth firms is booming yet a strong conceptual understanding of how these firms obtain (and sustain) rapid growth remains (at best) partial. The main purpose of this paper is to explore the role founders play in enabling episodes of rapid growth and how they help navigate this process.

Design/methodology/approach

This paper reports the findings from a qualitative study involving in-depth interviews with entrepreneurs enlisted onto a publicly funded high growth business accelerator programme in Wales. These interviews explored the causes of the firms rapid growth, their key growth trigger points and the organisational consequences of rapid growth.

Findings

The research reveals that periods of high growth are intrinsically and inextricably inter-linked with the entrepreneurial traits and capabilities of their founders coupled with their ability to “sense” and “seize” pivotal growth opportunities. It also demonstrates founder-level dynamic capabilities enable firms to capitalise on pivotal “trigger points” thereby enabling their progression to a new “dynamic state” in a firm’s temporal evolution.

Originality/value

The novel approach towards theory building deployed herein is the use of theoretical elaboration as means of extending important existing theoretical constructs such as growth “trigger points” and founder dynamic capabilities. To capitalise on these trigger points, founders have to undergo a process of “temporal transitioning” to effectively manage and execute the growth process in firms. The work also has important policy implications, underlining the need for more relational forms of support for entrepreneurial founders.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 30 no. 1
Type: Research Article
ISSN: 1355-2554

Keywords

Book part
Publication date: 24 August 2022

Preetam Gaikwad

Research on high-growth firms (HGFs) or gazelles is expanding due to their significant contribution to job growth and economic development. However, the knowledge about the…

Abstract

Research on high-growth firms (HGFs) or gazelles is expanding due to their significant contribution to job growth and economic development. However, the knowledge about the conditions and factors that set these firms on their rapid growth trajectory remains fragmented. Therefore, this chapter provides an abreast inventory of the surging gazelle studies by systematically reviewing the international gazelle growth literature and consolidating firm-level, industry-level, and macroeconomic-level growth factors and their interactions as elaborated in the studies. Based on the review of 62 international empirical studies, this chapter finds that the gazelle growth is complex and multidimensional in its scope and nature. The firm’s growth intention and entrepreneurial nature emerge as necessary but not sufficient conditions to guarantee rapid growth as it results from the impact of and interaction between various firm-level and external factors. The different growth-influencing factors are summarized using a theoretical gazelle growth model, which supports the rare and temporal nature of the gazelle growth.

Details

The Promises and Properties of Rapidly Growing Companies: Gazelles
Type: Book
ISBN: 978-1-80117-819-8

Keywords

Article
Publication date: 21 February 2024

Vivien Lefebvre

This paper aims to revisit the relationship between sales growth and profitability by exploring the direct and indirect effects of cost stickiness in the growth process. Cost…

Abstract

Purpose

This paper aims to revisit the relationship between sales growth and profitability by exploring the direct and indirect effects of cost stickiness in the growth process. Cost stickiness refers to asymmetric variations of costs associated with increases and decreases in sales. Cost stickiness is analyzed as a strategic liability that negatively affects profitability because it contributes to organizational rigidity that causes opportunity costs.

Design/methodology/approach

The empirical design is based on a large sample of 65,599 French firms drawn from the Amadeus database and it covers the period 2010 to 2019. The authors take advantage of the presentation of expenses made by nature in Amadeus to calculate cost stickiness in a more direct way than what is commonly done in the literature. The authors use various regression models to test the hypotheses.

Findings

For firms that experience rapid growth in sales, cost stickiness has a positive moderating effect on the relation between sales growth and profitability because of a higher asset turnover efficiency. However, for firms that experience slow growth, no growth or a decrease in sales, cost stickiness plays a negative moderating effect on the relation between sales and profitability.

Originality/value

This work contributes to the discussion about the conditions under which high growth is associated with greater profitability and conceptualizes cost stickiness as a strategic liability. The empirical context, privately held firms, has been overlooked by previous research.

Details

Journal of Accounting & Organizational Change, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1832-5912

Keywords

Article
Publication date: 1 May 2007

Johan Gaddefors

The purpose of this paper is to critically investigate the use of metaphor in the entrepreneurial process. In particular, the paper focuses on how metaphors are used in the…

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Abstract

Purpose

The purpose of this paper is to critically investigate the use of metaphor in the entrepreneurial process. In particular, the paper focuses on how metaphors are used in the construction of the environment, a precondition for the creation of business opportunities.

Design/methodology/approach

This paper reports on a two‐day meeting between Light, a management consultancy firm, and Epsilon one of their clients. The data are drawn from a larger ethnographic study within Light. The consultants and their clients are followed in their daily work. The focus was on how metaphor use influenced their organisational practices.

Findings

Investigating the play of metaphors in Epsilon, it is shown how the firm's environment is created; a pre‐condition for understanding how entrepreneurial opportunities are created. It is shown how use of metaphor, understood as a mode of interpretation, is taking place over time, and how it is part of a relational, context‐dependent process.

Research limitations/implications

The present study provides new ways of understanding the use of metaphor in the entrepreneurial process. It also indicates the need for a continued focus on language use in the entrepreneurial process. One limitation is that not all aspects of metaphor use are investigated.

Practical implications

This research can help to influence practitioners to pay more attention to the use of metaphors, not only as a tool for creative thinking or the questioning of embedded assumptions, but also as a mode for interpreting, structuring and producing images of the environment and the organisation.

Originality/value

This paper contributes to development of influences from the linguistic turn to entrepreneurship studies by exploring metaphor theory. One result of this focus on language is an increased sensitivity to metaphor use in the entrepreneurial process.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 13 no. 3
Type: Research Article
ISSN: 1355-2554

Keywords

Article
Publication date: 20 January 2012

Susan Coleman and Alicia Robb

The purpose of this paper is to explore the extent to which various theories of capital structure “fit” in the case of new technology‐based firms.

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Abstract

Purpose

The purpose of this paper is to explore the extent to which various theories of capital structure “fit” in the case of new technology‐based firms.

Design/methodology/approach

This study uses data from the Kauffman Firm Survey, a longitudinal data set of over 4,000 firms in the USA. Descriptive statistics and multivariate results are provided.

Findings

The authors' findings reveal that new technology‐based firms demonstrate different financing patterns than firms that are not technology‐based.

Research limitations/implications

Although some support was found for both the Pecking Order and Life Cycle theories, the results also indicate that technology‐based entrepreneurs are both willing and able to raise substantial amounts of capital from external sources.

Practical implications

Technology‐based entrepreneurs need external sources of equity, in particular, in order to launch and grow their firms.

Originality/value

To the authors' knowledge, this is the first article to test specific theories of capital structure using a large sample of new technology‐based firms in the USA.

Book part
Publication date: 24 August 2022

Florian Becker-Ritterspach

Current gazelle and high growth firm (HGF) research provides relatively little systematic knowledge if, how, why firm internationalization facilitates accelerated growth. This…

Abstract

Current gazelle and high growth firm (HGF) research provides relatively little systematic knowledge if, how, why firm internationalization facilitates accelerated growth. This chapter aims at providing such an insight by addressing the following three questions: (1) What is the evidence of internationalization as an determinant of HGF; (2) How does internationalization facilitates fast growth?; (3) What do we know about the circumstance under which internationalization contributes to HGF? The chapter concludes that while there is clear evidence that internationalization and its different modes can be important determinants of accelerated firm growth, our knowledge remains limited on how different circumstances of the firm at the micro-, meso- and macro-level interact to condition growth opportunities through internationalization.

Details

The Promises and Properties of Rapidly Growing Companies: Gazelles
Type: Book
ISBN: 978-1-80117-819-8

Keywords

Article
Publication date: 25 January 2022

Juan Martin Ireta Sanchez

This multiple case study research aims to identify the characteristics of scaling up SMEs in Chile for exploring how and why some entrepreneurship in the information technology…

Abstract

Purpose

This multiple case study research aims to identify the characteristics of scaling up SMEs in Chile for exploring how and why some entrepreneurship in the information technology (IT) sector are able to scale up and develop sustainable strategies, based on three consecutive years. The average sales of the companies during the last period analysed was around US$1,323,579, with an average annual growth rate of 66.7%. Scaling up SMEs may require several attributes to achieve positive revenue and develop effective high growth rates that allow them to succeed over several years.

Design/methodology/approach

To discern the phenomenon of entrepreneurship, the methodology of multiple case study research was conducted in three parts. The first was to define and design the research process, in which the study should settle the theory analysis and then show that research propositions and questions. The second part of the research was to prepare, collect and analyse the data through crafting instruments and data collection protocols as a source of evidence to conduct the pilot and multiple case study. In this stage, interviews were scheduled, transcribed, analysed and coded to explore how individual attributes may create a scaling-up entrepreneurial process for maintaining or developing high performance in the IT sector. The last part of the research concludes and validates the research propositions for the identification for potential attributes, which were obtained during the qualitative study.

Findings

Attributes were selected when 13 or more SMEs reported the importance of this initiative for the process of scaling up their SMEs. As a result of the data analysis, the empirical findings suggest on the importance of the academic background, budgetary control, negative entrepreneurial experiences, building teams, geographical expansion and first critical experience as key attributes for scaling-up. Additionally, the data propose that constructive entrepreneurial ecosystem and reforms financing markets and programmes are two additional components that could moderate the interaction between the scaling-up process and the achievement of rapid sales results as a key outcome measure.

Research limitations/implications

The first limitation was the lack of consensus on the phenomenon of the scaling up of entrepreneurship. Information in Latin America and emerging countries is scarce, which also represents an opportunity for other researchers to deepen and validate the results reported here. Even though it was an attempt to understand the issue of environmental change, this additional limitation did not allow the evaluation of these adjustments over time that can positively or negatively drive the strategies corresponding to the evolution in each of the moderator variables.

Practical implications

Because of the characteristics of the sample in terms of size of the SMEs, industrial sector, location, culture, socio-economic environment and years of establishment of the company, the study cannot be generalised in terms of other industrial sectors or countries. The results of this research are also limited to SMEs in Chile, and to the extent that it can be applied to emerging countries IT sectors with similar sample characteristics, it must be done so with caution. Yin states that eight cases “are sufficient replications to convince the reader of a general phenomenon”.

Social implications

Policymakers have the option to identify what skills and knowledge the entrepreneur requires to be trained to scale up their established ventures. In this context, they will also benefit from the empirical contribution of knowing what the restrictions that limit this process are, such as adverse tax systems and public strategies. Additionally, it is of public interest because no national records exist on the presence of theoretical terms.

Originality/value

Even though the literature promotes the present findings, it shows that there is an absence of empirical evidence in emerging economies to better comprehend which factors may affect the development process of scaling up entrepreneurship in the IT sector. Both deliberate and emergent strategic initiatives are necessary for the scaling-up process where six critical factors are the basis of the scaling-up. This empirical contribution for entrepreneurs will support the achievement of rapid and sustained sales results for scaling up their ventures.

Article
Publication date: 2 March 2012

Lucio Cassia and Tommaso Minola

This study seeks to focus on factors characterizing a pool of hyper‐growth firms, trying to gather insights on how the hyper‐growth firms achieve hyper‐growth.

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Abstract

Purpose

This study seeks to focus on factors characterizing a pool of hyper‐growth firms, trying to gather insights on how the hyper‐growth firms achieve hyper‐growth.

Design/methodology/approach

A theoretical framework is proposed, borrowing well established approaches from strategic management and entrepreneurship. Subsequently, some explorative case studies are described and help in understanding how much of a firm's hyper‐growth can be explained by the resource endowment and entrepreneurial orientation (EO). A revised framework and some propositions are eventually suggested.

Findings

Hyper‐growth seems mainly explainable by extraordinary business opportunities and extraordinary access to resources (especially knowledge‐based). Entrepreneurship appears much more as a moderating variable, rather than an explanatory variable per se of hyper‐growth.

Research limitations/implications

Although the case study approach is robustly motivated as a research step that can contribute to the process of theory building, the findings are not statistically generalizable.

Practical implications

It has long been argued that policy makers and governments, especially in Europe, should concentrate their efforts on those industries and environments where rapid growth firms are likely to be found. The paper offers a practical example on a suitable environment to facilitate such growth, where practices like mergers and acquisitions in foreign countries as well as venture capital and private equity financing play a role.

Originality/value

No research has been performed so far on the explicit link between resources, EO and hyper‐growth. Moreover, the research suggests a possible reconciliation of resource‐based view (RBV) and EO frameworks in explaining such a pattern.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 18 no. 2
Type: Research Article
ISSN: 1355-2554

Keywords

1 – 10 of over 8000