New Perspectives on Firm Growth
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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.
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Chapter 4: Are we comparing apples with apples or apples with oranges? Appropriateness of knowledge accumulation across growth studies

Dean A. Shepherd and Johan Wiklund

Extract

Firm growth has long been a topic of interest to scholars. By investigating the causes of firm growth, researchers gain insights into the drivers of this key dimension of firm performance (Wennekers & Thurik, 1999) and the key drivers of economies (Birch, 1977). Although we have undoubtedly made progress in our understanding of firm growth, mixed results cast a shadow of uncertainty over this collection of works (Davidsson & Wiklund, 2000; Weinzimmer, Nystrom, & Freeman, 1998). Although Davidsson and Wiklund and Weinzimmer et al. have proposed that methodological differences across studies have contributed, at least in part, to these mixed results, there has been insufficient investigation of which methodological differences produce mixed results and when results are robust across methodological differences. Weinzimmer et al. (1998) made a substantial contribution to the growth literature by taking a number of steps toward empirically investigating these issues. First, they find that there is a weak correlation between different indicators of growth (sales, employment, or assets) and between different formulae for computing growth (absolute, relative, and regression line).

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