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 9: Arriving at the High-Growth Firm

Per Davidsson, Frédéric Delmar and Johan Wiklund

Subjects: business and management, entrepreneurship

Extract

1 Frédéric Delmar, Per Davidsson, William B. Gartner EXECUTIVE SUMMARY The focus of this research is to offer a variety of ideas, measures, and empirical facts on how organizations grow. This chapter presents evidence that organization growth can be achieved in a number of different ways, and the pattern of firm growth, over time, can look very different across all growth firms. We use a data set that covers all firms in Sweden with more than 20 employees in 1996 tracing their development back to 1987. The data allow us to assess growth in sales as well as in employment, separate organic from acquired growth, identify new entrants, compare independent firms with firms in company groups, and track their subsequent growth over time. In addition, the article explores the differential representation of these growth patterns for firms of different demographic affiliation in terms of firm size, firm age, industry, and ownership/governance. A review of prior academic scholarship on firm growth suggests substantial heterogeneity in a number of factors that characterize this phenomenon. Failure to recognize this heterogeneity appears to have led to some confusion and conflict in current theory and research findings. There is variation in the kinds of growth measures used in previous research studies on firm growth. Comparison between studies is difficult as the time frame, the growth indicator, and the growth formula often differ. There is heterogeneity in the choice, validity, and reliability of different growth measures as determined from theoretical and methodological perspectives. Different...

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