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Explaining & Modelling Growth of SMEs

Goal: We seek to understand, explain and model the (lack of) growth of SMEs.

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Georges Romme
added a project goal
We seek to understand, explain and model the (lack of) growth of SMEs.
Amr Farouk
added 2 research items
Why some small and medium sized grow, while others do not, is a key question that largely remains unanswered in entrepreneurship research. In this paper, we develop a new opportunity-centric framework explaining the growth, stagnation and collapse of SMEs as well as the processes by which these changes occur. The framework is grounded in three in-depth case studies of fast-growing SMEs, which experienced specific episodes, or processes, of growth, collapse, and stagnation—caused by dynamics between four strategic orientations: ‘capacity acquisition’, ‘capacity utilization’, ‘exploration’ and ‘exploitation’. Our findings indicate that short-term growth is determined by balancing the former two; while long-term growth and survival is primarily determined by the capability to balance the (opportunities that arise from) latter two strategic orientations. Based on the developed framework and empirical findings, we distill several different process theories (i.e., growth patterns) that result from the dynamic complexity (incl. delays) caused by transitioning from one strategic orientation to the other. Our study contributes to the literature by developing a dynamic framework that links the SME's strategic orientation, entrepreneurial orientation and growth curve. Our theorizing offers a dynamic alternative to the conventional (linear) stages model, and as such will enable large-scale quantitative studies of SME growth processes.