Entrepreneurial Growth Pattern: an Academic Case Study

Growth is one of the most important goals of most startups and entrepreneurs in particular small businesses and plays a dominant role in some macroeconomic factors such as unemployment rate, economic growth, regional growth, etc. Nowadays, growth is a gauge for measuring the success of small firms.

In the academic study for my MBA thesis in Umeå School of Business and Economics, I have chosen the growth as the research topic with the focus on entrepreneurial growth in small firms. Moreover, I have also tried to explore the probable differences between the growth pattern of dotcoms and brick-and-mortars.

The study is based on the case study methodology and the main case was my own small firm that I have started in Umeå, north of Sweden. In order to get better results and increase the objectivity I have chosen four supporting firms as additional cases and interviewed with their CEOs.

In the study I came up with a final framework which is the growth pattern of small firms. The framework describes why, how, and where of new venture growth as well as the outside factors that impact the growth.

Growth Motives

The first part of the growth pattern justifies the reason of the growth in the entrepreneurial firms. New venture growth can have different of reasons from which entrepreneur’s character weighs more. It is the ambition and risk-taking character of the entrepreneurs that push the firm to further growth. The interpretation of the results from the study reveals that the character of the entrepreneur have been the main reason of their decision of growth. I have already discussed about the golden eagle entrepreneurs and the importance of entrepreneur’s character. Need for achievement, environmental factors, organizational structure, resources, and industry context are the other reasons of the growth.

Growth Strategy

The growth of small firms can be domestic or international. This is one part of the growth strategy. The CEOs choose either to internationalize or just growth in the domestic market. Internationalization is one of the strategies that firms choose during their growth. On the other hand, some ventures grow domestically and they do not choose the international market.

Availability of financial resources defines the next part of the growth strategy. According to the findings of the study, most entrepreneurs chose their ownership strategy based on the availability of financial resources. If they can finance internally, they will approach for it; else they go for outside finance such as venture capitals, angles, etc. The method of financing impacts the ownership of the company as well. In this study, the finding shows that the financial resources decide for the ownership strategy of small firms, not the manager.

Growth Indicators

There are three major indicators of growth for small firms. Increase in assets is the first indicator of small firm’s growth. The other growth indicator is the growth in number of employees in a company. As some companies prefer outsourcing than permanent employment, the increase in the outsourced workload and freelancer projects is also the same indicator as the growth in the number of employees. Finally, the increase in sales or profit is also considered as another indicator of the growth.

Growth Stimulus

There are some factors that influence the growth of small firms. The growth and its speed can be augmented via growth stimulus. Growth stimulus is not the same for all companies and each firm should consider its own growth stimulus based on the nature of the company, organization structure, mission and goal of the company and the management strategy. The feedback from the growth indicator is essential part of the growth pattern in order to get better idea of which growth stimulus can help the company’s growth. Innovation, network, niche market, bootstrapping techniques are some sorts of growth stimulus that each firm can use. The CEO can perform better after managing to choose a correct growth stimulus for the company and optimize the changes.

Dotcoms Vs. Brick-and-Mortars

The growth pattern of dotcoms is the same as the conventional firms. Nonetheless, this study revealed some interesting facts when it comes to the comparison of dotcoms and brick-and-mortars.

Over 100 academic journal articles have been reviewed and used in this study and the findings can be used in managerial decision making as well as academic purposes. If you are interested to read the whole research you can download it from here.