Factors distinguishing small firm growers and non-growers

Abstract

Why do some firms grow while others do not? This study identifies factors present in growing small firms that are absent in non-growers. An inductive method is used with a theoretical sample of businesses with contrasting growth histories, selected as matched pairs from the same manufacturing and service industries in the same urban location. Replication logic identified four factors: opportunistic perceptions of the external environment; controlled ambition of the owner-manager to grow; business culture of innovation and flexibility; and use of extensive private business networks, including portfolio entrepreneurship. The role of organizational learning in underpinning these factors was also noted. The paper ends with some limitations and suggestions for further research.

Computer literacy and use of ICT as key factors of micro-enterprise success

“…R&D does not affect the growth rate of new low-tech fi rms, which seem to be driven mainly by the growth ambitions of the founding entrepreneur. Similar conclusions were found also by Hansen and Hamilton [10] where the owners and managers of the growing fi rms contrasted from the non-growth fi rms in their growth ambitions, their optimism and opportunistic strategic thinking. The growing fi rms were more adaptable, proactive and innovative, particularly towards international market opportunities.…”

“…Formal and informal networking seems to be one of essential factors for micro-enterprise survival and growth [10]. The owners and managers of the growing businesses were highly networked individuals and emphasized how important this was to success.…”

Entrepreneurship and the determinants of firm survival within regions: human capital, growth motivation and locational conditions

“…If the entrepreneur chooses alternative development paths for their venture, this makes the ability to grasp growth opportunities less important. This is reflected in the connection between growth motivation and the performance threshold through its influence on psychic income (Hansen and Hamilton 2011).…”

“…Despite these difficulties, however, it is recognised that not all entrepreneurs have the same ambitions, and intentions for their businesses, with some seeking to grow their businesses, whilst others may only seek greater independence and autonomy (Mochrie, Galloway, and Donnelly 2006;Block and Wagner 2010;Hansen and Hamilton 2011;Douglas 2013). A heightened growth motivation has been associated with those entrepreneurs who seek opportunities, innovate and are instinctive in their nature (Morrison, Breen, and Ali 2003).…”

“…Outside of this range, the expectation is that the survival of the enterprise will be compromised either through a lack of relevant experience or a desire to retire (Andersson Joona 2010;Haapanen and Tervo 2009). It is acknowledged that the survival of the enterprise is not solely reliant on the human capital of the entrepreneur, but that they will be able to draw upon the human capital of their employees, especially as these enterprises have moved through the start-up phase. However, scholars such as Blackburn, Hart and Wainwright (2013) and Hansen and Hamilton (2011) note how the owner-managers of SMEs play an important role in determining the strategies pursued, are a key resource for small firms, and ultimately have an important influence on the performance achieved by the firm. These direct and indirect influences on survival are shown by Figure 2, with influences on both the performance of the firm and the performance threshold.…”