The integrated resource-based and transaction cost approach to the growth process of firms

Abstract

Purpose The purpose of this paper is to discuss the process of entrepreneurial growth from the perspective of the resource-based view (RBV) of the firm and transaction cost theory (TCT) and to formulate propositions regarding the entrepreneurs’ decisional rules and structural elements in this process. Design/methodology/approach The argumentation draws upon three fields of academic research, namely, entrepreneurship studies on firm growth as well as strategic management and organization science studies on company scope and size (boundary). A systematic review of the literature was performed that combines the RBV and TCT to explain a firm’s boundary. Findings Three levels of entrepreneurial decisional rules in the process of growth were identified. The first level includes main decisional criteria. The second level approaches the structural elements of growth process, namely, its motives, rationale, mechanism and modes. The third level assumes evolutionary approach to decision making, namely, feedback relationships among transaction costs, governance and capabilities to create value from growth. Originality/value The paper broadens the early stream of research in the process of entrepreneurial growth. It contributes to explaining the way growth is realized, instead of identifying its predictors, which has dominated in to-date studies. The entrepreneurs’ decisional rules and choices in the process of expansion were suggested. Moreover, the integrated RBV-TCT approach was proposed as a theoretical background for studying this phenomenon.

SME Roles in Modular Value Chains: Perspectives for Growth and Innovativeness

“…The impact of the value chain modularisation on the positions as well as pro-spects for growth and innovation of SMEs has been unexplored. SMEs are predominantly perceived as third-tier suppliers that occupy lower-value positions (Humphrey & Schmitz, 2002;2004a;Belaya & Hanf, 2014;Lungwitz et al, 2006;Gancarczyk, 2016). However, the international entrepreneurship literature provides an optimistic evidence of innovativeness and growth of small firms (Oviatt & McDougall, 2005;Coviello & Munro, 1997;Coviello, 2006;Gancarczyk & Gancarczyk, 2017).…”

“…Upgrading denotes the improvement of relative competitive position due to the development of capabilities in the area of products, processes, functions and value chain governance to advance into more sophisticated, higher value-adding activities (Gereffi, 1996;Humphrey & Schmitz, 2002;Humphrey & Schmitz, 2004a;Humphrey & Schmitz, 2004b;Gancarczyk & Gancarczyk, 2016). There is a direct relationship between upgrading and innovation development.…”

“…In the industry structure dominated by lead companies and contract manufacturers, the weakest bargaining power is possessed by small and medium-sized companies 2 from the lower-cost locations (Belaya & Hanf, 2014;Lungwitz et al, 2006;Gancarczyk, 2016). Such companies experience cost and margin pressures from contract manufacturers who globally coordinate suppliers competing for business.…”

“…Moreover, there is a controversy in two important literature streams as to development prospects for SMEs in global networks. In the global value chains (GVCs) literature, SMEs are predominantly seen as lowest-tier providers that occupy lower-value positions and struggle for survival due to cost competition, low margins, and high transaction costs (Humphrey & Schmitz, 2002;2004a;Belaya & Hanf, 2014;Lungwitz, Lee, & Campagna, 2006;Gancarczyk, 2016). On the other hand, the literature in international entrepreneurship presents SMEs as proactive global players that accomplish expansion through innovation (McDougall & Oviatt, 2000;Oviatt & McDougall, 2005;Coviello & Munro, 1997;Coviello, 2006;Gancarczyk & Gancarczyk, 2011;2017).…”

The dynamics of SME growth processes and the role of enabling constraints: an evidence-based theoretical framework

“…Our work proposes that ECs include not only artifacts (for example business plans and product technologies) but also entrepreneur's perceptions as antecedents of D&As that lead to the emergence of artifacts (Chen et al , 2018; Sarason et al , 2006). To date, there have been virtually no attempts in entrepreneurship studies to provide empirical evidence of enabling constraints as a dynamic phenomenon and to further reflect on their essence (Gancarczyk, 2017).…”