Entrepreneurship and the Growth of Firms

Entrepreneurship and the Growth of Firms

Per Davidsson, Frédéric Delmar and Johan Wiklund

In this book, three leading scholars have integrated some of their most important research in order to answer these questions on firm growth. The result is a volume that builds on studies of many thousands of firms in several different projects. It offers deep insights into the firm growth phenomenon and how it can be studied.

Chapter 4: Measuring Growth: Methodological Considerations and Empirical Results

Per Davidsson, Frédéric Delmar and Johan Wiklund

Subjects: business and management, entrepreneurship

Extract

* Frédéric Delmar INTRODUCTION Regardless of their sizes, expanding and growing firms are indeed the creators of new jobs and of a healthy economy (cf. Storey, 1995). This is also one of the central issues of entrepreneurship research beside innovation and venture creation. Consequently, it is important to examine the determinants of business growth, and the measurement of growth in new ventures and small businesses presents a significant challenge for scholars. Accurate and appropriate measurement of growth is of central importance to entrepreneurship research. In order to accumulate knowledge about the processes and variables that affect business growth, we have to understand how the choice and construct of the dependent variable of growth will affect the resulting model. Without adequate understanding of the importance of the construct of the dependent variable, theory development will be impeded, results will conflict with each other and will have little practical relevance. This is not an unknown problem, and some work has been done to guide academics in their choice of performance measures in the quest to assess and model entrepreneurship (for example Brush and Vanderwerf, 1992; Chandler and Hanks, 1993; Murphy, Trailer and Hill, 1996). However, the literature has mainly concentrated on the reliability and validity of different performance measures which are available in that literature. The purpose of these papers has been to compare different performance measures and data collection methods, because data gathering related to performance has been seen as a problem. It is acknowledged here that data gathering can...

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