The Economic Contribution of High-Growth Firms: Do Policy Implications Depend on the Choice of Growth Indicator?

Prior studies have defined high-growth firms (HGFs) in terms of growth in firm employment or firm sales, and primarily analyzed their contribution to overall employment growth. In this paper we define HGFs using the commonly applied growth indicators (employment and sales), but also add definitions based on growth in value added and productivity. Our results indicate that HGFs in terms of employment are not the same firms as HGFs in terms of productivity, and that their economic contributions differ significantly. Economic policy promoting fast growth in employment may therefore come at the cost of reduced productivity growth. Although HGFs of different definitions may not be the same firms, young firms are more likely to be HGFs irrespective of definition. This suggests that economic policy should focus on the conditions for new firm formation and early growth of firms, rather than target a particular type of HGFs.     

Assessing the Determinants of High-Growth Manufacturing Firms in Italy

Few firms grow rapidly, but their contribution to employment growth is often impressive. The main purpose of this paper is to analyse both the external and internal factors that can affect the probability of being a high-growth firm (HGF) in Italy. We found that HGFs are, on average, young firms and are present in different industries, but the role of demand is important to understanding their performance at the sectoral level. Moreover, our findings show that financial constraints and profitability are not associated with the probability of being a HGF. HGFs, on average, are characterised by high productivity, but only when growth is measured in terms of sales. The most original results of this study concern the endogenous determinants of rapid growth, which have yet to be adequately examined in the literature. First, we found that the concentration of ownership is important for HGFs that experienced rapid growth in their sales. Second, the quality of human capital is a strong point for firms experiencing rapid employment growth.     

Knowledge spillovers and high-impact growth: Comparing local and foreign firms in the UK

This paper is concerned with entrepreneurial high-impact firms, which are firms that generate ‘both’ disproportionate levels of employment and sales growth, and have high levels of innovative activity. It investigates differences in the influence of knowledge spillovers on high-impact growth between foreign and local firms in the UK. The study is based on an analysis of data from UK Innovation Scoreboard on 865 firms, which were divided into ‘high-impact firms’ (defined as those achieving positive growth in both sales and employment) and low-impact firms (negative or no growth in sales or employment). More precisely, the paper investigates the influence of knowledge spillovers on high-impact growth of foreign and local firms, from regional, sectoral and firm size perspectives. The findings suggest that (1) firms’ access to regional knowledge spillovers (from businesses and higher education institutions) is more significantly associated with high-impact growth of local firms in comparison to foreign firms; (2) because knowledge spillovers are more likely to occur in high-tech sectors (compared to low-tech sectors), firms in high-tech sectors are more associated with high-impact growth. Nonetheless, the relationship is stronger for local firms compared to foreign firms; (3) because small firms have greater need for knowledge spillovers (relative to large firms), there is a negative relationship between firm size and high-impact growth, but the negative relationship is greater for UK firms in comparison to foreign firms. Implications are drawn for policy and research.     

Processes of firm growth and diversification: theory and evidence

Investigating the role of diversification in the firm growth process, we build on Penrose’s (The theory of the growth of the firm. Oxford University Press, Oxford, 1959) Theory of the Growth of the Firm to formulate hypotheses about growth of employment, assets and sales in the years before, during and after a new product introduction. We exploit a new database from the German machine tool industry that boasts a detailed and meaningful definition of diversification. Our exploratory analyses indicate that diversification, in terms of product introductions, is preceded by employment growth. Moreover, we find support that diversification is positively associated with subsequent asset growth, but negatively associated with subsequent employment growth.     

New ventures and employment growth

The research studied the extent to which the employment size of a new firm is set the start, how many subsequently grow, and whether those that survive and grow have any identifiable characteristics. Answers to these questions would help to determine whether future assistance programs aimed at improving the performance of new firms should concentrate on the actual start-up process or on the first few years of trading.The study was pan of a series conducted in St. Joseph County, Indiana, a county that had experienced the same economic decline as the rest of the midwest, rust-belt of the United States. It formed part of a community effort, named Project Future, to develop a strategy for industrial regeneration. The series first examined the characteristics of the new firm population during the years 1976–1982 (Birley 1985, 1986), and two results emerged that were pertinent to this study. First, 92% of the firms that ceased trading in the first two years were the smaller ones, employing less than 20 people: second, the entrepreneur in the county tended to use only the informal networks of family and friends when gathering the resources of the firm, rather than the formal networks of accountants, lawyers, realtors, and banks. The question that remained, therefore, and which formed the basis of this article, was the extent to which it was possible to identify, and thus focus the strategy upon, those firms or industrial sectors that exhibited growth characteristics. Three research questions were posed: how many tended to grow during the first few formative years; what was the rate of growth and on what dimensions did it occur; and when did growth occur—were there differences in the growth of firms of different ages?The primary measure of growth used was that of employment. For both the start of the firm and at the time the questionnaire was administered (1983), data were collected on the number of owners, part-time and full-time, and on the number of employees both part-time and full-time and on their level of skill. Financial data included sales level, profits level, and forecast sales trend. Indicators of possible change were either an altered legal structure or a move of premises. Control variables included incubator characteristics, industry, and supplier and customer geographic base.The results of the study show that, for the majority of the firms, employment size was set at the start. No aggregate growth occurred in either full-time or part-time jobs, nor was there any apparent age effect. During the six years studied, firms that had increased the number of employees were of all ages. Those firms that grew sales during the early years did so by increasing the customer base, and without generating further jobs.Analyzing growth by industry, only one significant result emerged: Entrepreneurs from smaller companies tended to set up in competition with their incubator firm, while those from larger firms tended to start firms with no apparent relationship to their previous employment.The major inference from this study is that growth would appear not to be a primary objective of the entrepreneur. Further research to test these results is clearly necessary. Should they be replicated elsewhere, however, future strategies to improve the job generation capabilities of new firms would be most fruitful if directed at building a solid foundation for all firms rather than trying the impossible task of “picking winners.” Such assistance can only be provided at the time that the resources necessary for the successful launch of the firm—premises, equipment, orders, employees, money—are being assembled. Since almost all of these firms are local in nature, strategies that devise specific schemes tailored to meet local needs and using local people are most appropriate. By contrast, the small number of high-growth firms should be easily identifiable in the community and assisted individually.     

Pioneers and followers: Competitive tactics,environment, and firm growth

Market pioneering—where a firm is first to offer a distinctively new product to the market—is a commonly recognized form of corporate entrepreneurship. As with other forms of corporate entrepreneurship, the linkage between market pioneering and firm performance has received limited empirical attention, much of which has yielded inconsistent results. Nonetheless, two conclusions regarding when and how pioneering relates to firm performance are revealed in the literature. First, theory and past research suggest that pioneering is an environment-specific phenomenon. That is, certain types of environments may be most likely to encourage or reward the actions of pioneers, while these same actions may meet with limited success in other environments. Second, theory and past research suggest that firm performance is affected by the fit between a firm's pioneer/follower status and its competitive tactics. In other words, market entry order moderates the effectiveness of a firm's competitive tactics such that certain tactics will be most effective when employed by market pioneers, while other tactics will be most effective when employed by market followers.Considered jointly, the preceding observations suggest that insights might be gained regarding the effective management of market pioneering and market following by seeking to understand (a) how these phenomena are manifested in different industry environments and (b) what pioneers and followers do differently in these environments to promote their performance. The research described in this paper addresses these issues. In particular, this paper develops theory that describes how particular competitive tactics are thought to relate to firm sales growth rate among market pioneers and market followers in two distinct environmental settings. Hypotheses are developed based on the following research propositions:P1: In hostile environments, pioneers and followers will differentially benefit in achieving high sales growth rates from their reliance on relatively high prices, relatively broad product lines, relatively broad served (geographical) markets, relatively advanced process technologies, and relatively advantageous purchasing arrangements.P2: In benign environments, pioneers and followers will differentially benefit in achieving high sales growth rates from their reliance on relatively high quality products, relatively strong product warranties, relatively high advertising and promotion expenditures, relatively strong control over distribution channels employed, and relatively large numbers of distribution channels employed.To test the hypothesized relationships, data were collected from the senior managers of 103 independent, nondiversified manufacturing firms operating in 75 industries. Cluster analysis, ANOVA, and correlational analysis were employed as the principal analytical techniques.The results suggest that market pioneers grow neither more nor less rapidly than market followers. However, in hostile environments, pioneering may enable firms to break out of the dominant price-based mode of competition and grow in spite of charging high prices. This ability of pioneers to excel in hostile environments seems to be further facilitated by limiting product line breath to a small number of product offerings that provide a “tight fit” with market needs. Pioneers in hostile environments also appear to be relatively better served than followers from gaining a wide geographical distribution for their products. Followers in hostile environments, on the other hand, should seek to reduce their cost structures in order to effectively sustain low price strategies. The employment of advanced process technologies and the pursuit of “purchasing advantages” were actions which proved to be more advantageous for followers than for pioneers in hostile environments.The managerial implications of this research applicable to benign environment firms are quite different. Other things being equal, relatively high prices may not be as detrimental to growth among followers in benign environments as they are among followers in more hostile environments. Benign environment followers may, in fact, be better off when they charge relatively high prices and compete on non-price bases. The results also suggest that, in benign environments, offering products with warranties superior to those of competitors may have a significantly more positive effect on sales growth among pioneers than followers. Moreover, employing a large number of distribution channels appears to benefit pioneers more than followers. However, among the sampled firms, benign environment pioneers that realized the greatest growth did not have extensive control over distribution channel members. Therefore, benign environment pioneers may grow more quickly if they target their distribution-related resources toward expanding their channels rather than toward controlling some smaller number these channels.This study contributes to the pioneering literature by having corroborated several findings of the PIMS-based studies regarding tactical differences between pioneers and followers, and by having further documented the relevance of market entry order (or pioneer/follower status) as a moderator of the performance associated with particular competitive tactics. Moreover, by having examined the tactics-performance relationships of pioneers and followers in two distinct environmental settings, this study adds specificity and empirical support to the emerging theoretical paradigm that depicts pioneering as an environment-specific phenomenon. Finally, this study contributes to the literature on coping with hostility by having theorized about and empirically identified common and effective bases for competition under varying levels of environmental hostility.     

Survival and Growth Patterns among New Technology‐Based Firms: Empirical Study of Cohort 2006 in Sweden

This study investigates the survival and growth trends in a cohort of new technology‐based firms (NTBFs) established in Sweden in 2006. This cohort has faced both an economic upswing and a severe downturn, which started in 2008, and by 2014 provides 8 years of historical records. Our study makes several contributions to the current understanding of NTBF survival and growth. First, our empirical observations show that many NTBFs (72 percent) from the 2006 cohort were still operating at the end of 2014, indicating a much higher survival rate than those found in previous studies. Second, surviving firms from the 2006 cohort positively affected employment, as their annual job creation was higher than the reduction in employment caused by exiting firms. Third, very few companies experienced high‐growth during their first 7 years, and employment growth and sales growth were highly correlated among high‐growth firms.     

企业生命周期阶段、销售操控与未来业绩

基于公司层面的生命周期阶段变量,结合Roychowdhury (2006)提出的销售操控估计方法,本文检验生命周期不同阶段下公司销售操控程度及其经济后果是否存在差异。结果表明：(1)销售操控程度存在显著的生命周期效应,在生命周期各阶段呈现出U型分布：导入期和衰退期的销售操控程度最高,淘汰期和增长期次之,成熟期最低。(2)销售操控的经济后果也存在显著的生命周期效应,同样呈现出U型分布：导入期和衰退期销售操控对未来业绩的负面影响最小,淘汰期和增长期次之,成熟期的负面影响最大。本文的研究结论不仅提供了销售操控影响因素和经济后果方面的经验证据,而且对于透析企业生命周期的作用机理具有重要的实践意义。     

Industry changes in technology and complementary assets and the creation of high-growth firms

This study uses employment data to examine why some industries host more new high-growth firms than others. Using a unique data base of 201 industries over a 15-year period, we find that increases in the proportion of employment of scientists and engineers in industries are positively associated with counts of fast-growing new firms; however, we do not detect a relationship between fluctuations in the proportion of employment in sales and production occupations and counts of fast-growing new firms. The findings suggest that technological innovation is an important determinant of entrepreneurial opportunity. Further, they suggest that private new firms are an important means of organizing commercial innovation and that new firms may be less constrained by complementary assets than has been previously understood.     

Venture capital investor type and the growth mode of new technology-based firms

Independent venture capital (IVC) investors have more powerful incentives than corporate venture capital (CVC) investors to take actions that signal their capabilities (i.e. to “grandstand”). We argue that this should engender differences in the treatment effect of IVC and CVC on the mode of growth of portfolio companies. Short-term sales growth of IVC-backed firms in the period that immediately follows the VC investment should outpace that of CVC-backed firms, while we expect no difference in employment growth. We find support for these theoretical predictions on a sample of 531 Italian new technology-based firms, using several panel estimators to control for endogeneity of IVC and CVC.     

Creative industries, new business formation, and regional economic growth

In this article we explore the impact of a series of factors, including creativity, intellectual property rights activities, new business formation, and the provision of amenities, on economic growth for 103 Italian provinces over the period spanning 2001 to 2006. Provincial growth rates are measured in terms of employment growth and value-added growth. The findings reveal that an increase in the number of firms active in the creative industries and net entry have a positive effect on regional employment growth. The share of legal immigrants is also found to positively impact employment growth. A high number of university faculties is found to lead to less employment growth, whereas trademarks, patents, cultural amenities, and industrial districts have no significant effect. Value-added growth is for a large part determined by employment growth, but no additional productivity-enhancing effects of the factors discussed are found.     

Meta‐marketing: Unifying organisational focus to achieve marketplace goals and objectives

Marketing and sales have not received the same emphasis from western leadership that they have in Japan. In the American model, one group markets, another sells, another designs and manufactures, and another sets organisational goals and objectives. Each area becomes separate and isolated without a common focus. Well‐designed meta‐marketing strategies directed by senior management can facilitate rapid and productive responses to changing environments.

To excel in a global economy, the field of marketing must take a new position, rethinking its fundamental relationship to all aspects of the organisation and its external environment. The perception of marketing must move beyond its present paradigm. To improve profits and sales by x percent each year is limiting. A business should expand in relation to potential, not last year's profits. A marketing focus must be designed that will increase market share, growth, short‐ and long‐term profits, and employment. Leadership can improve productivity by directing all employees to reflect a common corporate marketing and sales focus.     

New York's smoker-free regulations: Effects on employment and sales in the hospitality industry

Contrary to claims that smoke-free regulations cause decreases in hospitality-industry sales, this study determined that neither sales nor employment is hurt when smoke-free regulations are put in place. That conclusion is based on an examination of changes in restaurant's and hotel's business levels in five populous New York State jurisdictions that have implemented smoke-free regulations (namely, Erie, Monroe, Suffolk, and Westchester counties, and five boroughs of New York City). Using states sales data and employment data for eating and drinking establishment and for hotels, the study compared those statistics for the year before the regulation was implemented with the same statistics for the first year following implementation. The regulations in the counties being studied require a 100-percent smoke-free dining area unless such an area is separately enclosed and separately ventilated. The study examined trends in per-capita levels of sales and employment, as well as the fraction of restaurant sales to total sales. Additionally, a combined model considered data from all counties in the state to compare sales and employment outcomes. Instead of damaging hospitality sales and employment, the onset of smoke-free regulations was associated with increases in per-capita taxable sales for eating and drinking establishments and hotels (controlling for other economic factors). Employment rose in hotels, while no measurable change was observed for employment in restaurants operating under smoke-free regulations. The study concludes that smoke-free regulations have not been bad for business in New York State restaurants or hotels.     

The Small Business Sector in Recent Recoveries

Small businesses account for half of private GDP, half of the private workforce, and most new jobs. This paper documents that small businesses have fared unusually poorly in the current recovery, dragging down output and employment growth, even while large businesses and agriculture have prospered. The reasons for the poor performance of small business are documented and analyzed with data from surveys of the National Federation of Independent Business. The findings contradict much conventional wisdom relating to six broad aspects of small business activity: employment and hiring plans, expectations and investment, past sales and earnings, inventories, prices, and credit conditions. The implication of the findings is that a robust economic recovery for the entire U.S. economy will depend on public policy that is tailored to permit and encourage small business expansion.     

Gazelles as job creators: a survey and interpretation of the evidence

It is often claimed that small and young firms account for a disproportionately large share of net employment growth. We conduct a meta-analysis of the empirical evidence regarding whether net employment growth rather is generated by a few rapidly growing firms—so-called Gazelles—that are not necessarily small and young. Gazelles are found to be outstanding job creators. They create all or a large share of new net jobs. On average, Gazelles are younger and smaller than other firms, but it is young age more than small size that is associated with rapid growth. Gazelles exist in all industries. They seem not to be overrepresented in high-technology industries, but there is some evidence that they are overrepresented in services.     

Work–family conflict in the sales force redux: A compendium of influencers

Abstract

Selling is a primary function of channels of distribution with sales managers and salespeople markedly influencing channel success. Recently, salesperson work–family conflict has become a major concern, owing to its potential for adversely affecting sales force performance and thus impairing associated channel success. It has been extensively investigated in industrial-organizational (I/O) psychology, but sales scholars’ interest in it remains in the incipient stage. Whether findings from non-sales contexts are portable to a selling milieu remains an empirical question. This article presents an array of organizational- and managerial-related, individual job-related, individual person-related, technology-related, and contemporary selling environment-related factors that have been found to be or are logically associated with salesperson work–family conflict. The article thus seeks to facilitate sales researchers’ and practitioners’ efforts in undertaking empirical work and assisting salespeople to manage such conflict. To date, no previously published work has engaged in this charge.     

Multichannel customer purchase behavior and long tail effects in the fashion goods market

The fast-paced growth of e-commerce is impacting the type and variety of products consumers purchase across channels. A commonly held theory, known as long tail theory, posits that online sales are less concentrated at the top of the sales distribution than offline sales, and that more variety is bought online, making the tails of the overall sales distribution denser with the growth of e-commerce. Most of the literature testing the long tail theory has focused on examining entertainment goods markets that do not require much physical examination, and has predominantly found results consistent with the theory. However, the magnitude and antecedents of the observed long tail effects might be different for product categories containing products that require more physical examination before purchase, such as fashion goods. In this study, using detailed individual and transaction level panel data from two multichannel fashion goods retail brands, we show that while the shift to the online channel results in a decrease in the concentration of overall sales for both brands, this change mostly results from consumers buying different products online rather than consumers buying a greater variety online compared to offline. We show that the flattening of the overall sales distribution with the growth of e-commerce in our data is driven by consumers sorting their purchases into channels based on product characteristics. In contrast to the recommendations from the previous long tail literature, our results show that fashion apparel retailers do not need to offer broader assortments online compared to offline, but they may find it profitable to carry or emphasize a different product mix online compared to offline. Our results also provide guidance to fashion goods retailers in curating their online and offline assortments and setting inventory management strategies across the channels.     

供应链提前期压缩问题研究

本文认为,压缩供应连提前期具有重要战略意义,可以更好地实现供应链管理的目标,减少供应链非增值过程,提高供应链需求预测的准确性,减轻供应链中的牛鞭效应,避免供应链销售损失。文章提出,供应链提前期的压缩就是针对物流提前期和信息提前期进行的时间压缩,但二者并不是独立进行的,而是采取综合的时间压缩措施诸如改善业务流程,采取延迟化策略,运用各种供应链管理模式,利用并行工程技术,实施绿色再制造,充分利用信息技术等。     

Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth

This paper focuses on certain drivers of SME sales growth related to knowledge and innovation. Building on the dynamic capabilities literature, we test whether two organizational capabilities (external sourcing and employee involvement in renewal activities) predict sales growth, and if so, whether such effects are mediated by process and/or product innovation. Based on survey data from a panel study of Dutch SMEs, and controlling for several firm characteristics (firm size, sector, age and family business), we conclude that external sourcing has direct effects on both product and process innovation, with an indirect effect (mediated by process innovation) on sales growth. In line with our hypothesis development, we also find that employee involvement, while positively affecting process innovation, has a negative effect on sales growth. Firm size moderates the effects of two of the variables (external sourcing and product innovation) on sales growth, with more positive effects found for the smallest firms, results supporting the nimbleness (versus resource-based) view.