Chapter 5: Firm Size Expectations of Nascent Entrepreneurs
5. Firm size expectations of nascent entrepreneurs1 Frédéric Delmar, Per Davidsson INTRODUCTION Business growth and especially early growth is of special importance as it represents one of the major sources of job creation. Several studies have shown that small and medium-sized firms play a very large and/or growing role as job creators (Davidsson, Lindmark and Olofsson, 1996; Davidsson, Lindmark and Olofsson, 1994; Reynolds and White, 1997; Storey, 1994). In Sweden, this is mainly a result of many small start-ups and their incremental expansions. Thus, new employment opportunities are heavily dependent on the number of organizations created and their early growth. New firms can create new job opportunities in two ways: by their start size, and by their subsequent growth. Furthermore, we know that there is a substantial variation among firms with regard to both start size and subsequent growth. While the absolute majority of the firms remain small, some firms choose to engage in growth. It is therefore interesting to examine more closely the expectations of nascent entrepreneurs with regard to expected start size and expected subsequent growth. These expectations, whether they are realized or not, represent the initial ambitions of a population of nascent entrepreneurs. High growth ambitions should, arguably, also lead to higher rates of realization, that is, larger start sizes and higher growth rates, compared with lower ambitions. Thus, knowledge about the determinants of growth expectations during the venture creation phase may be central if we want to influence and to support the growth of...
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