IDEAS home Printed from https://ideas.repec.org/a/kap/sbusec/v49y2017i2d10.1007_s11187-017-9847-9.html
   My bibliography  Save this article

How young firms achieve growth: reconciling the roles of growth motivation and innovative activities

Author

Listed:
  • Alexander McKelvie

    (Syracuse University)

  • Anna Brattström

    (School of Economics and Management, Lund University)

  • Karl Wennberg

    (Linköping University
    Ratio Institute)

Abstract

Growth orientation is important for understanding why some young firms grow but not others, but research remains silent on the intermediary mechanisms mediating the growth orientation–firm growth relationship. We study 282 Swedish firms and show that various innovative activities mediate the growth orientation–firm growth relationship. These mediating innovative activities include informal activities and the launch of new products, but not formal R&D. Our findings offer a more complete explanation for how growth orientation translates into realized growth, serving to reconcile empirical inconsistencies about the relationship between innovation and young firm growth.

Suggested Citation

  • Alexander McKelvie & Anna Brattström & Karl Wennberg, 2017. "How young firms achieve growth: reconciling the roles of growth motivation and innovative activities," Small Business Economics, Springer, vol. 49(2), pages 273-293, August.
    • Handle: RePEc:kap:sbusec:v:49:y:2017:i:2:d:10.1007_s11187-017-9847-9
    DOI: 10.1007/s11187-017-9847-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11187-017-9847-9
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11187-017-9847-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rufin Baghana & Pierre Mohnen, 2009. "Effectiveness of R&D Tax Incentives in Small and Large Enterprises in Québec," CIRANO Working Papers 2009s-01, CIRANO.
    2. Johan Wiklund & Dean A. Shepherd, 2011. "Where to from Here? EO-as-Experimentation, Failure, and Distribution of Outcomes," Entrepreneurship Theory and Practice, , vol. 35(5), pages 925-946, September.
    3. Frédéric Delmar & Johan Wiklund, 2008. "The Effect of Small Business Managers’ Growth Motivation on Firm Growth: A Longitudinal Study," Entrepreneurship Theory and Practice, , vol. 32(3), pages 437-457, May.
    4. Cassar, Gavin, 2006. "Entrepreneur opportunity costs and intended venture growth," Journal of Business Venturing, Elsevier, vol. 21(5), pages 610-632, September.
    5. Raghuram G. Rajan & Luigi Zingales, 2001. "The Firm as a Dedicated Hierarchy: A Theory of the Origins and Growth of Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 805-851.
    6. Delmar, Frédéric & McKelvie, Alexander & Wennberg, Karl, 2013. "Untangling the relationships among growth, profitability and survival in new firms," Ratio Working Papers 205, The Ratio Institute.
    7. Agustí Segarra & Mercedes Teruel, 2014. "High-growth firms and innovation: an empirical analysis for Spanish firms," Small Business Economics, Springer, vol. 43(4), pages 805-821, December.
    8. Marco Capasso & Tania Treibich & Bart Verspagen, 2015. "The medium-term effect of R&D on firm growth," Small Business Economics, Springer, vol. 45(1), pages 39-62, June.
    9. Ajzen, Icek, 1991. "The theory of planned behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 50(2), pages 179-211, December.
    10. Chandler, Gaylen N. & Hanks, Steven H., 1994. "Market attractiveness, resource-based capabilities, venture strategies, and venture performance," Journal of Business Venturing, Elsevier, vol. 9(4), pages 331-349, July.
    11. Estrin, Saul & Korosteleva, Julia & Mickiewicz, Tomasz, 2013. "Which institutions encourage entrepreneurial growth aspirations?," Journal of Business Venturing, Elsevier, vol. 28(4), pages 564-580.
    12. Alfred Kleinknecht & Kees Van Montfort & Erik Brouwer, 2002. "The Non-Trivial Choice between Innovation Indicators," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(2), pages 109-121.
    13. Alexander McKelvie & Johan Wiklund, 2010. "Advancing Firm Growth Research: A Focus on Growth Mode Instead of Growth Rate," Entrepreneurship Theory and Practice, , vol. 34(2), pages 261-288, March.
    14. Patricia Phillips McDougall & Jeffrey G. Covin & Richard B. Robinson & Lanny Herron, 1994. "The effects of industry growth and strategic breadth on new venture performance and strategy content," Strategic Management Journal, Wiley Blackwell, vol. 15(7), pages 537-554, September.
    15. Mikael Samuelsson & Per Davidsson, 2009. "Does venture opportunity variation matter? Investigating systematic process differences between innovative and imitative new ventures," Small Business Economics, Springer, vol. 33(2), pages 229-255, August.
    16. Kleinknecht, Alfred, 1987. "Measuring R&D in Small Firms: How Much Are We Missing?," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 253-256, December.
    17. Martin, Ben R., 2012. "The evolution of science policy and innovation studies," Research Policy, Elsevier, vol. 41(7), pages 1219-1239.
    18. Scott Shane, 2009. "Why encouraging more people to become entrepreneurs is bad public policy," Small Business Economics, Springer, vol. 33(2), pages 141-149, August.
    19. Ingrid Verheul & Linda Van Mil, 2011. "What determines the growth ambition of Dutch early-stage entrepreneurs?," International Journal of Entrepreneurial Venturing, Inderscience Enterprises Ltd, vol. 3(2), pages 183-207.
    20. Martin Koudstaal & Randolph Sloof & Mirjam van Praag, 2016. "Risk, Uncertainty, and Entrepreneurship: Evidence from a Lab-in-the-Field Experiment," Management Science, INFORMS, vol. 62(10), pages 2897-2915, October.
    21. Oliver E. Williamson, 1967. "Hierarchical Control and Optimum Firm Size," Journal of Political Economy, University of Chicago Press, vol. 75, pages 123-123.
    22. V. Krishnan & Karl T. Ulrich, 2001. "Product Development Decisions: A Review of the Literature," Management Science, INFORMS, vol. 47(1), pages 1-21, January.
    23. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
    24. Alex Coad, 2010. "Exploring the processes of firm growth: evidence from a vector auto-regression," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(6), pages 1677-1703, December.
    25. Raquel Ortega-Argilés & Peter Voigt, 2009. "Business R&D in SMEs," JRC Working Papers on Corporate R&D and Innovation 2009-7, Joint Research Centre.
    26. Erik Stam & Karl Wennberg, 2009. "The roles of R&D in new firm growth," Small Business Economics, Springer, vol. 33(1), pages 77-89, June.
    27. Rufin Baghana & Pierre Mohnen, 2009. "Effectiveness of R&D tax incentives in small and large enterprises in Québec," Small Business Economics, Springer, vol. 33(1), pages 91-107, June.
    28. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, vol. 37(4), pages 633-648, May.
    29. Davidsson, Per & Achtenhagen, Leona & Naldi, Lucia, 2010. "Small Firm Growth," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 6(2), pages 69-166, May.
    30. David Audretsch & Alex Coad & Agustí Segarra, 2014. "Firm growth and innovation," Small Business Economics, Springer, vol. 43(4), pages 743-749, December.
    31. Michael Peneder, 2008. "Firm entry and turnover: the nexus with profitability and growth," Small Business Economics, Springer, vol. 30(4), pages 327-344, April.
    32. Kwaku Atuahene-Gima & Anthony Ko, 2001. "An Empirical Investigation of the Effect of Market Orientation and Entrepreneurship Orientation Alignment on Product Innovation," Organization Science, INFORMS, vol. 12(1), pages 54-74, February.
    33. Santamara, Llus & Nieto, Mara Jess & Barge-Gil, Andrs, 2009. "Beyond formal R&D: Taking advantage of other sources of innovation in low- and medium-technology industries," Research Policy, Elsevier, vol. 38(3), pages 507-517, April.
    34. Davidsson, Per, 1991. "Continued entrepreneurship: Ability, need, and opportunity as determinants of small firm growth," Journal of Business Venturing, Elsevier, vol. 6(6), pages 405-429, November.
    35. Sven-Olov Daunfeldt & Niklas Elert, 2013. "When is Gibrat’s law a law?," Small Business Economics, Springer, vol. 41(1), pages 133-147, June.
    36. Dean Shepherd & Johan Wiklund, 2009. "Are we Comparing Apples with Apples or Apples with Oranges? Appropriateness of Knowledge Accumulation across Growth Studies," Entrepreneurship Theory and Practice, , vol. 33(1), pages 105-123, January.
    37. Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2014. "High-growth firms and innovation: an empirical analysis for Spanish firms," Working Papers 2072/228402, Universitat Rovira i Virgili, Department of Economics.
    38. Kolvereid, Lars, 1992. "Growth aspirations among Norwegian entrepreneurs," Journal of Business Venturing, Elsevier, vol. 7(3), pages 209-222, May.
    39. Raquel Ortega-Argilés & Marco Vivarelli & Peter Voigt, 2009. "R&D in SMEs: a paradox?," Small Business Economics, Springer, vol. 33(1), pages 3-11, June.
    40. Thornhill, Stewart, 2006. "Knowledge, innovation and firm performance in high- and low-technology regimes," Journal of Business Venturing, Elsevier, vol. 21(5), pages 687-703, September.
    41. Brouwer, Erik & Kleinknecht, Alfred, 1999. "Innovative output, and a firm's propensity to patent.: An exploration of CIS micro data," Research Policy, Elsevier, vol. 28(6), pages 615-624, August.
    42. Shaker A. Zahra & Donald O. Neubaum & Galal M. El–Hagrassey, 2002. "Competitive Analysis and New Venture Performance: Understanding the Impact of Strategic Uncertainty and Venture Origin," Entrepreneurship Theory and Practice, , vol. 27(1), pages 1-28, January.
    43. Wennberg, Karl & Wiklund, Johan & Wright, Mike, 2011. "The effectiveness of university knowledge spillovers: Performance differences between university spinoffs and corporate spinoffs," Research Policy, Elsevier, vol. 40(8), pages 1128-1143, October.
    44. Zahra, Shaker A. & Bogner, William C., 2000. "Technology strategy and software new ventures' performance: Exploring the moderating effect of the competitive environment," Journal of Business Venturing, Elsevier, vol. 15(2), pages 135-173, March.
    45. Delmar, Frederic & Davidsson, Per & Gartner, William B., 2003. "Arriving at the high-growth firm," Journal of Business Venturing, Elsevier, vol. 18(2), pages 189-216, March.
    46. Karl Wennberg & Göran Lindqvist, 2010. "The effect of clusters on the survival and performance of new firms," Small Business Economics, Springer, vol. 34(3), pages 221-241, April.
    47. Song, Michael & Wang, Tang & Parry, Mark E., 2010. "Do market information processes improve new venture performance?," Journal of Business Venturing, Elsevier, vol. 25(6), pages 556-568, November.
    48. Helena Yli‐Renko & Erkko Autio & Harry J. Sapienza, 2001. "Social capital, knowledge acquisition, and knowledge exploitation in young technology‐based firms," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 587-613, June.
    49. Jacobsson, Staffan & Oskarsson, Christer & Philipson, Joakim, 1996. "Indicators of technological activities -- comparing educational, patent and R & D statistics in the case of Sweden," Research Policy, Elsevier, vol. 25(4), pages 573-585, June.
    50. Coad, Alex & Frankish, Julian & Roberts, Richard G. & Storey, David J., 2013. "Growth paths and survival chances: An application of Gambler's Ruin theory," Journal of Business Venturing, Elsevier, vol. 28(5), pages 615-632.
    51. Martin Falk, 2012. "Quantile estimates of the impact of R&D intensity on firm performance," Small Business Economics, Springer, vol. 39(1), pages 19-37, July.
    52. Rosenbusch, Nina & Brinckmann, Jan & Bausch, Andreas, 2011. "Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs," Journal of Business Venturing, Elsevier, vol. 26(4), pages 441-457, July.
    53. Johan Wiklund & Holger Patzelt & Dean Shepherd, 2009. "Building an integrative model of small business growth," Small Business Economics, Springer, vol. 32(4), pages 351-374, April.
    54. Cliff, Jennifer E., 1998. "Does one size fit all? exploring the relationship between attitudes towards growth, gender, and business size," Journal of Business Venturing, Elsevier, vol. 13(6), pages 523-542, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McKelvie, Alexander & Brattström, Anna & Wennberg, Karl, 2013. "The Relationship Between Innovation and New Firm Growth," Ratio Working Papers 206, The Ratio Institute.
    2. Yannis Caloghirou & Ioannis Giotopoulos & Alexandra Kontolaimou & Aggelos Tsakanikas, 2022. "Inside the black box of high-growth firms in a crisis-hit economy: corporate strategy, employee human capital and R&D capabilities," International Entrepreneurship and Management Journal, Springer, vol. 18(3), pages 1319-1345, September.
    3. Pietro Santoleri, 2020. "Innovation and job creation in (high-growth) new firms [An international cohort comparison of size effects on job growth]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(3), pages 731-756.
    4. Hyunseog Chung & Soomin Eum & Chulung Lee, 2019. "Firm Growth and R&D in the Korean Pharmaceutical Industry," Sustainability, MDPI, vol. 11(10), pages 1-19, May.
    5. SooGeun Ahn & Jeewhan Yoon & YoungJun Kim, 2018. "The innovation activities of small and medium-sized enterprises and their growth: quantile regression analysis and structural equation modeling," The Journal of Technology Transfer, Springer, vol. 43(2), pages 316-342, April.
    6. HERMANS, Julie & VANDERSTRAETEN, Johanna & DEJARDIN, Marcus & RAMDANI, Dendi & STAM, Erik & VAN WITTELOOSTUIJN, Arjen, 2012. "Ambitious entrepreneurship: Antecedents and consequences," Working Papers 2012023, University of Antwerp, Faculty of Business and Economics.
    7. Alexander McKelvie & Johan Wiklund & Anna Brattström, 2018. "Externally Acquired or Internally Generated? Knowledge Development and Perceived Environmental Dynamism in New Venture Innovation," Entrepreneurship Theory and Practice, , vol. 42(1), pages 24-46, January.
    8. Nason, Robert S. & Wiklund, Johan & McKelvie, Alexander & Hitt, Michael & Yu, Wei, 2019. "Orchestrating boundaries: The effect of R&D boundary permeability on new venture growth," Journal of Business Venturing, Elsevier, vol. 34(1), pages 63-79.
    9. Watson, John & Stuetzer, Michael & Zolin, Roxanne, 2017. "Female underperformance or goal-oriented behavior?," MPRA Paper 88403, University Library of Munich, Germany.
    10. José Pedro Carreón-Gutiérrez & José Manuel Saiz-Álvarez, 2019. "Opportunity Motivation and Growth Aspirations of Mexican Entrepreneurs: The Moderating Role of the Household Income," Sustainability, MDPI, vol. 11(22), pages 1-15, November.
    11. Erik Stam, 2010. "Growth beyond Gibrat: firm growth processes and strategies," Small Business Economics, Springer, vol. 35(2), pages 129-135, September.
    12. Delmar, Frédéric & Wallin, Jonas & Nofal, Ahmed Maged, 2022. "Modeling new-firm growth and survival with panel data using event magnitude regression," Journal of Business Venturing, Elsevier, vol. 37(5).
    13. Cyron, Thomas & Zoellick, Jan Cornelius, 2018. "Business Development in Post-Growth Economies: Challenging Assumptions in the Existing Business Growth Literature," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 29(3), pages 206-229.
    14. Vaz, Rolando, 2021. "Firm Growth: A review of the empirical literature," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 30(2), pages 1-20.
    15. Ioannis Giotopoulos & Alexandra Kontolaimou & Aggelos Tsakanikas, 2017. "Drivers of high-quality entrepreneurship: what changes did the crisis bring about?," Small Business Economics, Springer, vol. 48(4), pages 913-930, April.
    16. Massimo Baù & Francesco Chirico & Daniel Pittino & Mikaela Backman & Johan Klaesson, 2019. "Roots to Grow: Family Firms and Local Embeddedness in Rural and Urban Contexts," Entrepreneurship Theory and Practice, , vol. 43(2), pages 360-385, March.
    17. Sarra Kouada & Bénédicte Aldebert & Serge Amabile, 2018. "L’hypercroissance des start-up n’est pas un long fleuve tranquille : rôle et place des structures d’accompagnement ?," Post-Print halshs-01943501, HAL.
    18. Friesenbichler, Klaus S. & Hoelzl, Werner, 2022. "Firm-growth and Functional Strategic Domains: Exploratory evidence for differences between frontier and catching-up economies," Journal of Economics and Business, Elsevier, vol. 119(C).
    19. Coad, Alex & Segarra, Agustí & Teruel, Mercedes, 2016. "Innovation and firm growth: Does firm age play a role?," Research Policy, Elsevier, vol. 45(2), pages 387-400.
    20. Stefano Bianchini & Federico Tamagni & Gabriele Pellegrino, 2016. "Innovation strategies and firm growth," Working Papers 2016/10, Institut d'Economia de Barcelona (IEB).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:49:y:2017:i:2:d:10.1007_s11187-017-9847-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.