This paper provides an approach to new firm growth that views this as an unfolding developmental process. This approach is based on a Penrosean (1995) model of the firm. We find that new firm growth is non-linear and prone to interruptions and setbacks to an extent overlooked in the literature. From the model of development used, five propositions are drawn concerning measurable features of new firms' growth paths; these relate to patterns of survival, continuousness of growth, turning points, reversals and cumulative growth. These propositions are examined in the light of data on the growth paths of new firms in three countries, with aggregate comparisons of firms' growth paths effected by graphical representations and sequence analysis.Firm growth, growth paths, new firms, longitudinal research methods, Penrose,

Garnsey E. and Heffernan P. (2005) High‐technology clustering through spin‐out and attraction: the Cambridge case, Regional Studies 39 , 1127–1144. Co‐determinants that have shaped developments in high‐tech centres elsewhere are absent in Cambridge, UK, which thus provides a unique case demonstrating how technology enterprise around a science centre can transform local economic activity. But to capture dimensions of cumulative change requires a longitudinal approach. Here indicators that include rates of formation of new firms and their survival and growth over time are used to chart the transformation of collective capabilities. Emerging and growing areas of local competence are identified from data on the sectoral distribution of activity over time and on clusters of related activity in the Cambridge area that point to the emergence of specialized labour markets. The emergence of clusters of firms is related to serial spin‐out from the university and local businesses. Channels of diffusion of knowledge and influence among local firms are mapped by graphics of spin‐out clusters. Processes mobilizing social capital can be detected in the way technology‐based firms evolved a collective response to local problems that could not be solved by individual enterprise.Technology‐based enterprise, Regional entrepreneurship, Technology transfer, Spin‐out clusters, Entreprise à la pointe de la technologie, Esprit d'entreprise régional, Transfert de la technologie, Regroupements suite aux retombées, Auf Technologie gestützte Unternehmen, regionales Unternehmertum, Übertragung, Cluster als Folgewirkungen, Empresas de tecnología, Empresarialidad regional, Traspaso tecnológico, Grupos de spin‐outs, JEL classifications: L25, M13, R11, R30,

New firms in emerging industries are subject to complex dynamic processes which defy the attempts at prediction embodied in business conjectures. Discontinuous growth is common, but the issue of interruptions in the early growth of new firms has not been adequately addressed in the mainstream literature. We examine the prevalence of interruptions to growth in a cohort study of the growth trajectories of firms founded in 1990, then look to cases studies of individual firms to investigate underlying causes. We find that substantial growth is rare and continuous growth unusual, and that growth interruptions are the result of both internal and external dynamics. The managers of growing firms face shortages of vital resources and significant problems of resource synchronisation and coordination, many of which can lead to what are, in effect, changes of phase state. Meanwhile, the volatile environment of an emerging industry presents particular problems to young firms which have not yet built up reserves to sustain them through short-term crises. However, problem solving by those that survive provides an important source of learning which can underpin their future development. q

This paper examines setbacks in the early growth of new firms. Growth interruptions mark the unfolding, cumulative processes of firm growth overlooked in standard studies that use cross sectional methods. To probe for possible patterns in growth setbacks, we examined a cohort of 200 high technology firms founded in about 1990 and analysed the growth paths of survivors. Simple compression techniques yielded seven types of growth turning points. Growth setbacks are the norm even among firms with better growth records. Growth crises can be represented as a shift in phase state. To understand what such a shift implies, we focus on the micro-evidence relevant to processes of firm growth and illustrate growth crises from case studies. Growth crises represent both limits to knowledge and the means by which knowledge is revised and learning accelerated in the firm.

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