Growth in established SMEs : Exploring the innovative and ambitious firm

Abstract

The growth of firms is a complex but relevant subject for different stakeholders, such as owners, who want returns on their investment, and society, where firms are vessels for jobs and job creation. Despite the vast amount of research conducted on firm growth and factors associated with firm growth, there is no coherent body of knowledge, and the average firm is not growing.This research focuses on growth in established small and medium-sized enterprises (SMEs), i.e. firms that have passed the startup phase and have established themselves on the market. The purpose is to investigate the characteristics of high-growth established SMEs with special focus on the entrepreneur's growth ambitions and the role of innovation activities for firm growth.The data was collected from 88 established SMEs in which interviews were conducted with CEOs, owners, managers, and employees. A questionnaire was used which included questions regarding factors previously linked to firm growth such as resources, market factors, organizational factors, innovation, and attitude toward firm growth.The results show that growth ambitions have a limited impact on firm growth, and that growth ambitions alone are not a good predictor of firm growth. When high-growth firms were compared to the average established SME, there was no difference in the level the managers of the firms were seeking growth. Neither lack of growth, nor high growth, can be explained by the managers' perception of the firm's possibility to grow. Furthermore, there is no evidence that the difference in growth rates is attributed to different levels of growth opportunities.Instead, this research shows that what distinguishes high-growth firms from the average, nongrowing firms are factors associated with innovation, the market, and customer knowledge. The high-growth firms were found to be significantly better at identifying and delivering on unfilled demands. However, no evidence suggests that the high-growth firms had exclusive access to new technology they could leverage as a means to grow faster, and both groups believed there to be plenty of market opportunities and possibilities to create growing niches.If the difference between high growth and no growth in established SMEs is associated with external factors related to innovation, market and customers, it is interesting that when growth ambitions increase, so does the internal focus on organizational structures and systems.Ambitious entrepreneurs who seek firm growth should therefore not lose sight of external factors, and strive to quickly deal with increased internal complexity that accompanies firm growth.iii Istället visar denna studie att det som särskiljer snabbväxande etablerade SMF från genomsnittliga, icke växande, företag är faktorer knutna till innovation, marknad, och företagens kunskap om sina kunder. De snabbast växande företagen var betydligt bättre på att identifiera nya krav och utnyttja den efterfråga som fanns. Noterbart är att de snabbväxande företagen inte hade exklusiv tillgång till ny te...

Intentional model of MSMEs growth: a tripod-based view and evidence from Indonesia

“…Regarding the determinants of MSMEs growth, several previous studies have observed that factors such as company resources, human capital (age, experience and attitude), government and environmental characteristics are essential for the intention of managers/ owners to grow (Ali, 2018;Gancarczyk and Zabala-Iturriagagoitia, 2015;Neneh and Vanzyl, 2014;Wasilczuk and Zięba, 2009). In line with this opinion, the findings of Uddenberg (2015) assess that neither lack of growth cannot be explained by the manager/owner's perception of the company's possibility of growth but rather how the support system works. Moreover, there is no evidence that differences in growth rates are associated with different levels of growth opportunities.…”

“…The micro, small and medium enterprises (MSMEs) sector is a pillar of a nation's economic progress. However, the issue of MSME growth is still a significant topic today (Uddenberg, 2015;Wasilczuk and Zięba, 2009). In economic theory, growth is seen as a phenomenon that occurs to achieve maximum profit, but the reality is that not all MSMEs owners want to develop their businesses to maximise profits (Neneh and Vanzyl, 2014;Verheul and Mil, 2011).…”

“…Moreover, the difference between growth and no growth in MSMEs is often influenced by internal and external factors such as innovation support, government, finance, markets and customers (Neneh and Vanzyl, 2014;Uddenberg, 2015). Interestingly, as the desire for growth increases, the internal focus on organisational structures and systems increases as well.…”

“…Interestingly, as the desire for growth increases, the internal focus on organisational structures and systems increases as well. This means that MSME owners/managers seeking company growth should also consider external factors and quickly deal with the increased internal complexity that accompanies company growth (Uddenberg, 2015). Therefore, this study uses a tripod view perspective (the industry-based, resource-based and institution-based views) to explain this complex phenomenon (Gao et al, 2010;Peng et al, 2009).…”

A Study About the Evaluation Model of Growth for Internet SME

“…In summary, most scholars considerthe the important impacting factors in enterprise resources, human resources management, enterprise innovation and system suitability. While the financial situation [4] (Earnings per share, net profit margin growth, asset-liability ratio) are also an essential indicator as well (Uddenberg, 2015). Tran (2015) his research was conducted by using a multiple single-case studies methodology to gain a deeper understanding of the adoption factors behind New South Wales (NSW) micro enterprises [5].…”