Advertisement

The Process of Growth in the Small Firm

  • Tim Mazzarol
  • Sophie Reboud
Chapter
Part of the Springer Texts in Business and Economics book series (STBE)

Abstract

Small business growth is a goal that would seem desirable for all owner-managers. However, relatively few small business start-ups develop into large firms (e.g. with over 250 employees) (OECD, 2002, 2010). Many disappear along the way, either due to external factors beyond the control of the owner-manager, or more commonly due to internal factors over which they do have control. Perhaps it may come as a surprise to know that the majority of small business owner-managers choose not to grow their businesses (McMahon, 1998). This appears to be as a result of their lack of understanding or skills in how to achieve growth, as well as a conscious decision to restrict expansion and thereby maintain a business of a size that they can easily control (Nightingale & Coad, 2014). In Chap.  4, the three generic strategic options facing the small firm were outlined. These comprise stasis, exit and growth. As was noted, all three strategies are viable and demanding ones for a small business to follow. However, the growth strategy is probably the riskiest and most demanding. This chapter looks at the nature of small business growth and the challenges facing growing small firms.

Bibliography

  1. ABS. (2015). A profile of Australian women in business. Australian Bureau of Statistics for the Office for Women: Canberra, Australia. www.dpmc.gov.au.Google Scholar
  2. Alpander, G., Carter, K., & Forsgren, R. (1990). Managerial issues and problem-solving in the formative years. Journal of Small Business Management, 28(2), 9–18.Google Scholar
  3. Alvarez, S. A., & Busenitz, L. W. (2001). The entrepreneurship of resource-based theory. Journal of Management, 27(12), 755–775.CrossRefGoogle Scholar
  4. Ansoff, H. I. (1965). Corporate strategy. London: McGraw-Hill.Google Scholar
  5. Barnes, L. B., & Hershon, S. A. (1976). Transferring power in the family business. Harvard Business Review, 54(4), 105–115.Google Scholar
  6. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.CrossRefGoogle Scholar
  7. Berman, J., Gordon, D., & Sussman, G. (1997). A study to determine the benefits small business firms derive from sophisticated planning versus less sophisticated types of planning. The Journal of Business and Economic Studies, 3(3), 1–11.Google Scholar
  8. Bosworth, D. L., & Jacobs, C. (1989). Management attitudes, behaviour and abilities as barriers to growth. In J. Barber, J. S. Metcalfe, & M. Porteous (Eds.), Barriers to growth in small firms (pp. 20–38). London: Routledge.Google Scholar
  9. Brown, T., Davidsson, P., & Wiklund, J. (2001). An operationalization of Stevenson’s conceptualization of entrepreneurship as opportunity-based firm behaviour. Strategic Management Journal, 22(10), 953–968.CrossRefGoogle Scholar
  10. Caird, S. (1993). What do psychological tests suggest about entrepreneurs? Journal of Managerial Psychology, 8(6), 11–20.CrossRefGoogle Scholar
  11. Centre, K. (1999). Building the awesome organization: Kauffman gathering of entrepreneurs. Kansas City, MO: Kauffman Centre for Entrepreneurial Leadership.Google Scholar
  12. Chandler, A. D. (1962). Strategy and structure: Chapters in the history of the industrial Enterprise. Cambridge, MA: MIT Press.Google Scholar
  13. Churchill, N., & Lewis, V. (1983). The five stages of small business growth. Harvard Business Review, 61(3), 30–50.Google Scholar
  14. D’angelo, A., & Presutti, M. (2018). SMEs international growth: The moderating role of experience on entrepreneurial and learning orientations. International Business Review (in press).Google Scholar
  15. Davidsson, P. (1989). Entrepreneurship – And after? A study of growth willingness in small firms. Journal of Business Venturing, 4(3), 211–226.CrossRefGoogle Scholar
  16. Davidsson, P., Kirchoff, B., Hatemi, J. A., & Gustavsson, H. (2002). Empirical analysis of business growth factors using Swedish data. Journal of Small Business Management, 40(4), 332–349.CrossRefGoogle Scholar
  17. Davidsson, P., Steffans, P., & Fitzsimmons, J. (2009). Growing profitable or growing from profits: Putting the horse in front of the cart? Journal of Business Venturing, 24(4), 388–406.CrossRefGoogle Scholar
  18. Davila, A., Foster, G., He, X., & Shimizu, C. (2015). The rise and fall of start-ups: Creation and destruction of revenue and jobs by young companies. Australian Journal of Management, 40(1), 6–30.CrossRefGoogle Scholar
  19. Gibb, A., & Davies, L. (1992). Methodological problems in the development of a growth model of business enterprise. The Journal of Entrepreneurship, 1(1), 3–35.CrossRefGoogle Scholar
  20. Greiner, L. (1972). Evolution and revolution as organizations grow. Harvard Business Review, 50(4), 37–46.Google Scholar
  21. Greiner, L. (1998). Evolution and revolution as organizations grow. Harvard Business Review, 76(3), 3–11.Google Scholar
  22. Gundry, L. K., & Welsch, H. P. (2001). The ambitious entrepreneur: High growth strategies of women-owned enterprises. Journal of Business Venturing, 16(5), 453–470.CrossRefGoogle Scholar
  23. Hall, D. (1992). The hallmarks for successful business: Survival-change-growth. Oxfordshire, UK: Mercury Books.Google Scholar
  24. Hambrick, D., & Crozier, L. (1985). Stumblers and stars in the management of rapid growth. Journal of Business Venturing, 1(1), 31–45.CrossRefGoogle Scholar
  25. Hanks, S. H., Watson, C. J., Jansen, E., & Chandler, G. N. (1993). Tightening the life-cycle construct: A taxonomic study of growth stage configurations in high-technology organizations. Entrepreneurship Theory and Practice, 18(2), 5–29.CrossRefGoogle Scholar
  26. Havenes, P. A., & Senneseth, K. (2001). A panel study of firm growth among SMEs in networks. Small Business Economics, 16(4), 293–302.CrossRefGoogle Scholar
  27. Headd, B., & Kirchoff, B. (2009). The growth, decline and survival of small businesses: An exploratory study of life cycles. Journal of Small Business Management, 47(4), 531–550.CrossRefGoogle Scholar
  28. Hofer, C., & Charan, R. (1984). The transition to professional management: Mission impossible? American Journal of Small Business, 9(1), 1–11.CrossRefGoogle Scholar
  29. Holmlund, M., & Tornroos, J. A. (1997). What are relationships in business networks? Management Decision, 35(4), 304–309.CrossRefGoogle Scholar
  30. Jackson, A. W. (1994). It’s all in the plan. Small Business Reports, 38–43.Google Scholar
  31. Jarrett, D. (1998). A strategic classification of business alliances: A qualitative perspective built from a study of small and medium-sized enterprises. Qualitative Market Research, 1(1), 39–49.CrossRefGoogle Scholar
  32. Jennings, P., & Beaver, G. (1997). The performance and competitive advantage of small firms: A management perspective. International Small Business Journal, 15(2), 63–75.CrossRefGoogle Scholar
  33. Jones, L. (1992). How to obtain a small business loan. Economic Development Review, 10(2), 74–77.Google Scholar
  34. Kaufman, T., Weaver, P., & Poynter, J. (1996). Success attributes of B&B operators. Cornell Hotel and Restaurant Administration Quarterly, 37(4), 29–33.CrossRefGoogle Scholar
  35. Kazumi, T., Sato, Y., Nishikiori, A., Kurose, N., & Sato, Y. (1996). The entrepreneurial Spirit in Japan: A recent assessment. Wellesley, MA: Babson College.Google Scholar
  36. Kent, P. (1994). Management advisory services and the financial performance of clients. International Small Business Journal, 12(4), 45–58.CrossRefGoogle Scholar
  37. Kotey, B., & Meredith, G. (1997). Relationships among owner/manager personal values, business strategies, and enterprise performance. Journal of Small Business Management, 35(2), 37–64.Google Scholar
  38. Kroeger, C. V. (1974). Managerial development in the small firm. California Management Review, 17(1), 41–47.CrossRefGoogle Scholar
  39. Macpherson, A. D. (2005). Learning how to grow: Resolving the crisis of knowing. Technovation, 25(10), 1129–1140.CrossRefGoogle Scholar
  40. Martínez-Sola, C., García-Teruel, P., & Martínez-Solano, P. (2018). Cash holdings in SMEs: Speed of adjustment, growth and financing. Small Business Economics, 51(4), 823–842.CrossRefGoogle Scholar
  41. Mazzarol, T. (1999a). Partnerships – A key to growth in small business. Journal of Enterprising Culture, 7(2), 105–125.CrossRefGoogle Scholar
  42. Mazzarol, T. (1999b). Case studies of small business success: Exploration of a four factor success model. Paper presented at the 44th annual conference of the International Council for Small Business (ICSB), 20–23 June, Naples, Italy.Google Scholar
  43. Mazzarol, T. (2002). Innovativeness in small firms: An exploratory study of the perspectives of growth-oriented owner-managers. International Journal of Innovation Management, Policy & Practice, 4(1–3), 30–40.CrossRefGoogle Scholar
  44. Mazzarol, T. (2005). A proposed framework for the strategic management of small entrepreneurial firms. Small Enterprise Research: The Journal of SEAANZ, 13(1), 37–53.CrossRefGoogle Scholar
  45. Mazzarol, T., & Ramaseshan, B. (1998). Critical success factors in small business marketing: An examination of high and low performance firms. Journal of Global Business, 9(16), 35–45.Google Scholar
  46. Mazzarol, T., & Reboud, S. (2009). The strategy of small firms: Strategic management and innovation in the small firm. Cheltenham, UK/Northampton, MA: Edward Elgar.Google Scholar
  47. Mazzarol, T., Reboud, S., & Olivares, C. (2006). Bridging the gap: A study of strategic change and thinking within small firms. ICSB World Conference 2006, 19–21 June, Melbourne.Google Scholar
  48. McClelland, D. C. (1961). The achieving society. Princeton, NJ: Van Nostrand.CrossRefGoogle Scholar
  49. McMahon, R. (1998). Stage models of SME growth reconsidered. Small Enterprise Research: The Journal of SEAANZ, 6(2), 20–35.CrossRefGoogle Scholar
  50. Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman, H. J. (1978). Organisational strategy structure and process. Academy of Management Review, 3(3), 546–562.CrossRefGoogle Scholar
  51. Mintzberg, H., & Waters, J. (1984). Of strategies, deliberate and emergent (Readings in Strategic Management). Milton Keynes, UK: Open University Press.Google Scholar
  52. Moran, P. (1998). Personality characteristics and growth-orientation of the small business owner-manager. International Small Business Journal, 16(3), 17–38.CrossRefGoogle Scholar
  53. Mount, J., Zinger, T., & Forsyth, G. R. (1993). Organizing for development in the small business. Long Range Planning, 26(5), 111–120.CrossRefGoogle Scholar
  54. Navarro, J., Casillas, J., & Barringer, B. (2012). Forms of growth: How SMEs combine forms of growth to achieve high growth. Journal of Management and Organization, 18(1), 81–97.CrossRefGoogle Scholar
  55. Nightingale, P., & Coad, A. (2014). Muppets and gazelles: Political and methodological biases in entrepreneurship research. Industrial and Corporate Change, 23(1), 113–143.CrossRefGoogle Scholar
  56. OECD. (2002). High-growth SMEs and employment. Paris: Organisation for Economic Co-operation and Development.Google Scholar
  57. OECD. (2010). High-growth enterprises: What governments can do to make a difference. Paris: Organisation for Economic Co-operation and Development.CrossRefGoogle Scholar
  58. OECD. (2016). Financing SMEs and entrepreneurs 2016: An OECD scoreboard. Paris: Organisation for Economic Co-operation and Development (OECD) Publishing.Google Scholar
  59. Olson, P. D., & Bokor, D. W. (1995). Strategy process-content interaction: Effects on growth performance in small, start-up firms. Journal of Small Business Management, 33(1), 34–43.Google Scholar
  60. Penrose, E. (1952). Biological analogies in the theory of the firm. The American Economic Review, 42(5), 804–819.Google Scholar
  61. Penrose, E. (1959). The theory of the growth of the firm. Oxford: Blackwell.Google Scholar
  62. Perry, C., Meredith, G., & Cunnington, H. (1988). Relationship between small business growth and personal characteristics of owner/managers in Australia. Journal of Small Business Management, 26(2), 76–79.Google Scholar
  63. Prahalad, C., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79–91.Google Scholar
  64. Reedy, E. J., & Litan, R.E. (2011). Starting smaller; staying smaller. America’s Slow Leak in Job Creation. Ewing Marion Kauffman Foundation. www.kauffman.org
  65. Rothwell, N., & Beesley, R. (1989). The importance of technology transfer. In J. Barber, J. Metcalfe, & M. Porteous (Eds.), Barriers to growth in small firms (pp. 87–104). London: Routledge.Google Scholar
  66. Scase, R., & Goffee, R. (1985). Proprietorial control in family firms: Some functions of ‘quasi-organic’ management systems. Journal of Management Studies, 22(1), 53–68.Google Scholar
  67. Scott, M., & Bruce, R. (1987). Five stages of growth in small business. Long Range Planning, 20(3), 45–52.CrossRefGoogle Scholar
  68. Senge, P. (1990). The fifth discipline: The art and practice of the learning organization. Sydney, Australia: Random House Australia.Google Scholar
  69. Shuman, J. C., & Seeger, J. A. (1986). The theory and practice of strategic management in smaller rapid growth firms. American Journal of Small Business, 11(1), 7–18.CrossRefGoogle Scholar
  70. Simon, H. (1996). The secrets of the truly successful. Director, 50(3), 62–68.Google Scholar
  71. Slevin, D., & Covin, J. (1997). Strategy formation patterns, performance, and the significance of context. Journal of Management, 23(2), 189–209.CrossRefGoogle Scholar
  72. Smallbone, D., Leigh, Roger., and North, David (1995). “The Characteristics and Strategies of High Growth SMEs.” International Journal of Entrepreneurial Behaviour & Research 1(3): 44-62.Google Scholar
  73. Snaith, W. (1997). Business management program course notes. Durham, UK: University of Durham Business School, Mill Hill Lane.Google Scholar
  74. Steinmetz, L. (1969). Critical stages of small business growth. Business Horizons, 12(1), 29–36.CrossRefGoogle Scholar
  75. Stoica, M., & Schindehutte, M. (1999). Understanding adaptation in small firms: Links to culture and performance. Journal of Developmental Entrepreneurship, 4(1), 1–18.Google Scholar
  76. Storey, D. (1994). Understanding the small business sector. London: Routledge.Google Scholar
  77. Taylor, C. (1986). To grow or not to grow? Working Woman, 11(2), 49.Google Scholar
  78. Tushman, M., & Nadler, D. (1986). Organizing for innovation. California Management Review, 28(3), 74–92.CrossRefGoogle Scholar
  79. Watson, T. (1995). Entrepreneurship and professional management: A fatal distinction. International Small Business Journal, 13(2), 34–44.CrossRefGoogle Scholar
  80. Watts, G., Cope, J., & Hulme, M. (1998). Ansoff’s matrix, pain and gain: Growth strategies and adaptive learning among small food producers. International Journal of Entrepreneurial Behaviour & Research, 4(2), 101–111.CrossRefGoogle Scholar
  81. Weber, P., Geneste, L. A., & Connell, J. (2015). Small business growth: Strategic goals and owner preparedness. Journal of Business Strategy, 36(3), 30–36.CrossRefGoogle Scholar
  82. Weinzimmer, L. G., Nystrom, P. C., & Freeman, S. J. (1998). Measuring organizational growth issues: Consequences and guidelines. Journal of Management, 24(2), 235–262.CrossRefGoogle Scholar
  83. Wiklund, J., Davidsson, P., & Delmar, F. (2003). What do they think and feel about growth? An expectancy-value approach to small business managers’ attitudes toward growth. Entrepreneurship Theory & Practice, 27(3), 247–270.CrossRefGoogle Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2020

Authors and Affiliations

  • Tim Mazzarol
    • 1
  • Sophie Reboud
    • 2
  1. 1.University of Western AustraliaCrawleyAustralia
  2. 2.Burgundy School of BusinessDijonFrance

Personalised recommendations