New Perspectives on Firm Growth

New Perspectives on Firm Growth

Per Davidsson and Johan Wiklund

This insightful volume presents a collection of innovative works by two of the leading researchers of firm growth. The studies extend previous research by providing stronger theoretical underpinnings and using longitudinal databases that can separate in time the firms’ growth from its presumed causes. They also break new ground by examining different modes of growth, such as sales growth vs. employment growth, and organic growth vs. acquisition-based expansion. Further, the studies investigate the drivers of firm growth and take a critical look at the effects, such as under what circumstances high growth is associated with high profitability.

Chapter 1: Building an integrative model of small business growth

Johan Wiklund, Holger Patzelt and Dean A. Shepherd

Subjects: business and management, entrepreneurship, strategic management


Small firm growth is a research area that has attracted considerable attention in recent years. Despite substantial increase in research volume, recent reviews of the literature on small firm growth suggest that little is still known about the phenomenon, and conceptual development has been limited (see Davidsson and Wiklund 2000, for an extensive discussion of the reviews and shortcomings in the field). A major reason for these shortcomings, it is argued, is that this literature is highly fragmented – several theoretical perspectives have been developed, but there is little conversation between these perspectives. For example, a striking feature of reviews of studies of firm growth is that each study only covers a fraction of the variables considered important in other studies (Storey 1994; Wiklund 1998). Most of the growth studies explicitly or implicitly relate to one of a number of theoretical perspectives to derive hypotheses for empirical testing. While this approach may contribute substantially to our in-depth understanding of aspects of small business growth, it is often left to the reviewer of this literature to attempt to bring together the pieces, in order to ‘see’ the big picture. This is a difficult task, as evidenced by the lack of overarching models of growth (Davidsson and Wiklund 2000), yet important.

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