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 5: Advancing firm growth research: a focus on growth mode instead of growth rate

Alexander McKelvie and Johan Wiklund

Extract

Firm growth constitutes one of the central topics of entrepreneurship research. Despite substantial interest and massive empirical research, theoretical development in the field has been notably slow (e.g., Davidsson & Wiklund, 2000; Delmar, Davidsson, & Gartner, 2003; Shepherd & Wiklund, 2009). A telling illustration is that the most comprehensive, adequate, and popular theory on growth was developed some 50 years ago with Penrose’s (1959) publication of The Theory of the Growth of the Firm. In this chapter, we explain that a major reason for this lack of development is the impatience of researchers to prematurely address the question of ‘how much?’ before adequately providing answers to the question ‘how?’ In other words, the vast majority of the research has been occupied with explaining differences in growth across firms, not acknowledging that there may be substantially qualitative differences in terms of how firms go about achieving this growth. A recent review (Shepherd & Wiklund) found over 80 empirical studies in our leading management and entrepreneurship journals published over the past 15 years attempting to explain differences in growth, not considering potentially qualitative differences in firms’ growth paths.

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