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New Firm Growth: Exploring Processes and Paths

Author

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  • Elizabeth Garnsey
  • Erik Stam
  • Paul Heffernan

Abstract

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.

Suggested Citation

  • Elizabeth Garnsey & Erik Stam & Paul Heffernan, 2006. "New Firm Growth: Exploring Processes and Paths," Industry and Innovation, Taylor & Francis Journals, vol. 13(1), pages 1-20.
  • Handle: RePEc:taf:indinn:v:13:y:2006:i:1:p:1-20 DOI: 10.1080/13662710500513367
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    References listed on IDEAS

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    1. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
    2. Almus, Matthias & Nerlinger, Eric A, 1999. "Growth of New Technology-Based Firms: Which Factors Matter?," Small Business Economics, Springer, vol. 13(2), pages 141-154, September.
    3. Scott Shane & Toby Stuart, 2002. "Organizational Endowments and the Performance of University Start-ups," Management Science, INFORMS, vol. 48(1), pages 154-170, January.
    4. Robert K. Kazanjian & Robert Drazin, 1989. "An Empirical Test of a Stage of Growth Progression Model," Management Science, INFORMS, vol. 35(12), pages 1489-1503, December.
    5. Best, Michael, 2001. "The New Competitive Advantage: The Renewal of American Industry," OUP Catalogue, Oxford University Press, number 9780198297451.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Firm growth; growth paths; new firms; longitudinal research methods; Penrose;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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