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The Strategic Management of High-Growth Firms:
A Review and Theoretical Conceptualization
Robert Demir, Karl Wennberg, Alexander McKelvie
Scholarsknowledge of the factors behind high-growth rms remains fragmented. This paper provides a systematic review of the
empirical literature concerning high-growth rms with a focus on the strategic aspects contributing to growth. Based on our review of 39
articles, we identify ve drivers of high growth: human capital, strategy, human resource management, innovation, and capabilities.
These drivers are combined to develop a conceptual model of high-growth rms that includes potential contingency factors among the
ve drivers. We also propose a research agenda to deepen the study of high-growth rms in strategic management.
©2016 Elsevier Ltd. All rights reserved.
Explaining rm growth has long been a prevalent topic for research on the strategic management of rms (Eisenhardt and
Schoonhoven, 1990; Penrose, 1959). High-growth rms (HGFs) offer a unique context to understand rm growth, with the
particularities of rapid growth illustrating management challenges that are not seen with other growing rms (Delmar et al.,
2003). Further, the potential of generating long-term economic returns to shareholders and stakeholders highlights the
importance of these rms (Coad et al., 2014b; Senderovitz et al., 2016). However, studying HGFs is fraught with challenges as
they are difcult to sample and follow (Daunfeldt et al., 2014) and have rapidly evolving organizational structures (Nicholls-
Nixon, 2005; Powell and Sandholtz, 2012) that make them difcult to study.
While research has established the importance of HGFs, research on the strategic management of such rms dincluding,
for example, what factors lead to the development of HGFs and their continued growth dremains fragmented and without
any systematic assessment (Coad et al., 2014a). We see three main reasons for the fragmented nature of HGF research
stemming from inconsistent denitions, sampling challenges, and organizational complexity. First, there are inconsistent
uses and measures for high growth.By and large, scholars agree that HGFs can be dened as rms growing at or above a
particular pace, measured either in terms of growth between a start and end year, or as annualized growth over a specic
number of years(Coad et al., 2014a, 95). The source of disagreements tends to relate to the specics regarding the pace of
growth, the nature of how growth is measured, and the number of years in which growth occurs (McKelvie and Wiklund,
2010). Second, the nature of high growth is often eeting, making HGFs difcult to empirically sample and track
(Daunfeldt and Halvarsson, 2014; Daunfeldt et al., 2014). This challenge is exacerbated by the fact that many HGFs are ac-
quired following their growth or shut down based on the major risks involved in such rapid expansion (Delmar et al., 2013).
Third, HGFs face signicant challenges in determining what kinds of strategies are needed for rapid growth since that level
and pace of growth entails substantially greater organizational complexity than average-growth rms (Covin and Slevin,
1990; Delmar and Shane, 2003; Delmar et al., 2003;Powell and Sandholtz, 2012). Combined, these three challenges have
resulted in the research on the strategic management of HGFs to be fragmented with limited cumulative knowledge building.
Consequently, we lack a solid foundation for new knowledge generation that builds upon robust and consistent approaches to
the concepts, denitions, and methods employed, thereby constraining the ndings of extant research to relatively isolated
streams of research. Setting the tone for future research on HGFs requiresa synthesis of extant ndings and concepts from the
disjointed literature.
To address this important oversight in the literature, we provide a systematic review of the literature on the strategic
management of HGFs. This review allows us to outline current ndings and synthesize them into a conceptual framework that
illustrates what distinguishes the management of HGFs from other types of rms. Our review is based on the literature of the
last 30 years of scholarly work on HGFs with a focus on empirical research on the strategic management of HGFs. We identify
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Long Range Planning 50 (2017) 431e456
past accomplishments, unresolved issues, and unanswered questions in the literature. We also highlightprogress as well as
methodological limitations. Summarizing empirical studies on the drivers of high growth, our review shows that the strategic
management of HGFs is based on ve drivers: the ways founders and employees leverage (1) human capital, (2) rm human
resource management (HRM) practices, (3) rm strategy, (4) rm innovation, and (5) rm capabilities for growth. Our coding
of the empirical studies included in our review reveals associations between these factors and a rms likelihood of expe-
riencing high growth as well as a number of potential contingency associations. Based on these direct and contingency
factors, we develop a conceptual framework to help guide future studies on the strategic management of HGFs in which we
suggest an outline of future opportunities for integrating related strategic management theory in research on HGFs.
Dening and conceptualizing high-growth rms
The history of strategic management research on HGFs can be traced to Hambrick and Croziers (1985) distinction between
stumblersand starsand Birch and Medoffs (1994) miceand gazelles,both of which describe different growth patterns
in rms. As briey mentioned, the denition of HGFs has been subject to signicant variations, including the type of rms
studied, the measures of growth used, and the mode of growth. As to the type of rms studied, research has shown that HGFs
exist in all industries and include all rm sizes, but there is an over-representation of small and young rms (Daunfeldt et al.,
2016; Delmar and Shane, 2003; Delmar et al., 2003). Regarding measures of high growth, there is less agreement in the
literature. A number of studies have used relative annual growth,orarms growth rate relative to the overall population of
rms in an industry, region, or country, as criteria for high growth. Others have used absolute growth measures, such as
increase in sales, employees, or productivity from one point in time to another (Havnes and Senneseth, 2001). The chosen
measure has implications for research design as studies focusing on relative growth tend to over-sample smaller rms, and
studies focusing on absolute growth tend to over-sample larger rms (Delmar,1997). A remedy for using absolute growth is to
estimate statistical models that control for business size, which decreases the inferential problems of samples dominated by
small rms. However, this approach does not control for the sample-selection problem of including primarily small rms in
the sample in the rst place. One way to strike a balance between these approaches is to use a combination of relative and
absolute growth rates or to use measures for dening minimum size criteria for inclusion in a study (Daunfeldt and
Halvarsson, 2014; Daunfeldt et al., 2014).
An increasingly accepted procedure for combining relative and absolute growth rates is to use the Organisation for
Economic Co-Operation and Developmentsdenition of HGFs, which excludes the prevalent over-representation of small
rms (fewer than 10 employees) in most economies. However, the literature has increasingly moved from measures of ab-
solute growth to relative measures in order to facilitate comparisons over time and across countries (Coad et al., 2014a).
Regarding the type of growth, the HGF literature examines three diverse types of growth: (1) growth in sales (inter-
changeably called turnover or revenue), (2) growth in number of employees (Delmar, 1997; Shepherd and Wiklund, 2009), and
(3) growth in productivity (Du and Temouri, 2015). The challenges inconsistent measures pose to understanding HGFs have led
scholars to be skeptical about the emergence of a single denition of HGFs, as different research questions require different
denitions of rm growth(Coad et al., 2014a, 105). Others suggest the need for more diverse performance measures
(Markman and Gartner, 2002, 72) for adequately sampling HGFs. Hence, we take these challenges of dening and sampling
HGFs as a motivation for our literature review of rm-level studies of HGFs.
Literature review on managing HGFs
Our systematic review of research concerning the strategic management of HGFs follows the guidelines and best practice
laid out in Macpherson and Holt (2007) and Wan et al. (2011). We adapted the process to focus specically on research on
HGFs within the realm of strategic management, thereby exclusively focusing on rm-level studies. This meant ignoring
much of the work done in economics on the importance of HGFs to an economy (Moreno and Coad, 2015). First, we searched
for the key terms high-growth rm,”“high growth,”“gazelles,and rapid growthin the keywords and abstracts across the
ISI Web of Knowledge and Google Scholar. We delimited our focus in the ISI Web of Knowledge to the elds of business,
management, and operations management. This presented a broad set of articles and journals.
Second, following the process presented in recent review articles on the topicof rm growth, we also conducted a focused
examination of select journals. These 18 core journals were highlighted as the leading journals in management, entrepre-
neurship, and innovation (Gilbert et al., 2006; Macpherson and Holt, 2007).
While the results from this more focused search
overlapped with those from our broader search, it also allowed us to ensure that in pressand other recent articles were
included. Combined, our searches resulted in a total of 231 unique papers.
The literature search was based on a set of (1) general management journals (Administrative Science Quarterly,Academy of Management Journal,Journal
of Management,Journal of Management Studies,Long Range Planning, Management Science,Organization Science, and Strategic Management Journal), (2)
entrepreneurship journals (Journal of Business Venturing,Strategic Entrepreneurship Journal,Entrepreneurship Theory &Practice, Small Business Economics,
International Small Business Journal, Entrepreneurship &Regional Development,Journal of Small Business Management), and (3) innovation journals (Industrial
and Corporate Change,Research Policy,and Technovation).
R. Demir et al. / Long Range Planning 50 (2017) 431e456432
From this relatively long list of publications, we manually reviewed articles for potential t with the purposes of our
review of empirical research ndings. This meant eliminating a large number of articles that were published in business
magazines (e.g., Forbes) or non-English scholarly journals. This weeding-out process reduced the total to 109 articles. We then
examined each article in greater depth and excluded papers that did not contain original empirical research. Examples of
reasons for elimination at this stage included articles that were conceptual and/or literature review papers, book reviews, and
teaching cases. Finally, we excluded papers that did not specically address rm- or managerial-level aspects of high growth
given our focus on strategic management. This narrowed down our nal sample to 39 papers published during the past 30
years (1985e2015).
Out of this sample, 33 papers were published in 13 out of the 18 journals selected as core to our review. In addition to these
13 journals, six papers were published in Academy of Management Executive,Applied Economics,British Journal of Management,
International Journal of Sociology,Journal of Business Research, and Management Decision. Hence, we did not nd any relevant
papers matching our search criteria in the following core journals: Administrative Science Quarterly,Entrepreneurship &
Regional Development,Journal of Management,Journal of Management Studies, and Management Science.
Table 1 provides a summary of the papers coded in our review. Our coding comprised two steps: one descriptive and one
analytical. The descriptive coding included the identication of the sample of rms used in each study, the denition of HGF
used, the type of analysis employed, the independent and dependent variable(s) used, and the main ndings presented. The
descriptive coding was performed by a research assistant and two of the authors. Each paper was then compared across the
coders, and inconsistencies were discussed and resolved. This resulted in brief descriptions of each of the coded aspects as
presented in Table 1.
In the second step, the rst author conducted analytical coding (Salda~
na, 2009) aimed at nding thematic commonalities
across the reviewed papers by identifying theoretically informed drivers of high growth. This coding process began by locating
the independent variable(s) and relating them to an established theoretical eld within the strategic management literature.
This process rendered ve elds, each with a distinctive theoretical domain: human capital (Coff, 2002), strategy (Andrews,
1971), HRM (Huselid, 1995), innovation (Schumpeter, 1947), and capabilities (Leonard-Barton, 1992; Penrose, 1959). After this
initial analytical coding process, the second author independently recoded the papers, and the differences were discussed
until agreed upon by the authors. This analytical procedure was an important step as it helped reveal limitations and
recognize possibilities for taking research on HGFs even further by helping formulate andjustify a framework for the strategic
management of HGFs.
The papers in Table 1 are presented in chronological order (rst column) beginning with Hambrick and Crozier (1985).In
line with our coding process described above, we present the different studies in terms of a few important characteristics
represented in different columns. The second column of Table 1 describes the sample utilized, and the third column provides
the denition of high growth employed by the authors. The fourth column summarizes the type of analysis (i.e., case study,
correlational study, or regression analysis with model specication). The fth column summarizes the independent vari-
able(s) or key factors (in qualitative studies) investigated, and the sixth column describes the dependent variable(s). The
seventh column summarizes the studys key results based on the independent variable(s) and the ndings reached. The nal
column identies the driver(s) of high growth identied by each study, which we use to build an organizing framework. In the
following sections, we summarize all of the studies in our review with a focus on these core areas of high growth and the
interactions affecting these factors, which are later summarized in a gure.
Summary of research on the strategic management of HGFs
Our focus in the review is on the empirical and thematic patterns found in the 39 articles on HGFs. As we can see in Table 1,
particularly in the columns addressing the samples, denitions, and methodologies employed, the focus of study and
methodological approaches used in prior research remain limited in scope. Among the 39 studies included in the review, 34
(87%) are quantitatively oriented, with only ve (13%) papers being qualitative in nature. This small number of qualitative
studies may have implications for rich theory-building or discoveryresearch that is groundbreaking in nature, such as
grounded theory, which is often inuential in developing in-depth knowledge on an empirical phenomenon. Among the 34
quantitative studies, 12 (35%) studies are based on descriptive or bivariate statistics instead of multivariate statistics. This
limits the ability to draw inferences about causality or strong relationships among explanatory variables. It also represents a
signicant shortcoming of existing research given the importance of HGFs to the economy, as we have limited knowledge of
the temporal nature or causality of growth factors in these rms. However, this lack of inferential or causal studies does offer
an opportunity for future research.
The choice of dependent variables studied in prior research (see column 5 in Table 1) is still limited to two outcomes: (1)
the likelihood of or (2) the magnitude of organic growth. In our review, 22 studies (56%) used a sales growth measure as the
dependent variable dmeasured either as absolute or relative sales growth over one or several consecutive years or as the
likelihood that a rm will grow in sales more rapidly than 90% of all other rms in a sample. Eight studies (20%) also looked at
employment growth as a dependent variable dmeasured by either the absolute or relative sales growth over consecutive
years. The remaining studies focused on a variety of alternative outcomes. Five studies (13%) looked at the specic challenges
facing HGFs, using either causal analysis of descriptive data (Hambrick and Crozier, 1985) or perception-based data from
R. Demir et al. / Long Range Planning 50 (2017) 431e456 433
Prior studies of the strategic management of high-growth rms (chronological order)
Author(s) and (Year) Sample HGF denition Analysis Independent
Dependent variable(s) Findings Driver(s) of high
Hambrick and Crozier
30 US HGFs identied
in Inc.s list of the
fastest-growing rms
Growth calculated over
a four-year period with
sales the starting year
between $100,000 and
$25 million
Mean annual growth of
the HGFs was 62.5%.
Causal analysis of
descriptive data, news
archives, and
discussions with
Instant size, a sense of
infallibility, internal
turmoil extraordinary
resource needs
Suggested solutions for
the challenges facing
The authors suggest
several challenges for
HGFs and argue for
managerial qualities
needed to overcome
such challenges: (1)
CEO growing into the
role as a manager of a
larger rm, (2)
competence hired into
the team, (3) joint
vision communicated,
and (4) hierarchical
structure introduced
during growth
Human capital, HRM
practices, strategy
Shuman et al. (1985) 220 US HGFs identied
in Inc.s list of the
fastest-growing rms
770% growth in sales
for 1978e1982 and
523% growth in
Bivariate analysis using
cross-tabs and chi-
square statistics
Strategic planning,
planning philosophy,
the planning process,
planning areas, and the
planning organization
Sales growth and
The majority of HGF
executives have prior
experience in starting
three or more ventures
Feeser and Willard
39 US HGFs identied
in Inc.s list of the
independent and
publicly traded rms
and a similar set of 39
low-growth rms in SIC
3573 (electronic
Growth calculated over
a four-year period with
sales the starting year
between $100,000 and
$25 million
Mean annual growth
was 62.5%
Bivariate analysis using
cross-tabs and chi-
square statistics
Founding team
contingency variables:
size, location, and type
of rm background
Mean compound
growth in sales
HGFs are more often
spinoffs from large
corporations and
compete in markets
and/or with
technologies closely
related to those of the
parent rm
Human capital
Fombrun and Wally
95 US rms surveyed
from a list of HGFs from
the 1984e1985 Forbes
and Inc. magazines
Growth between 1980
and 1985 amounting to
a mean annual growth
of 159% with 25þ
employees in the
starting year
Multivariate analysis of
variance (MANOVA)
and ordinary least
squares (OLS)
regression of various
industry and rm
characteristics on HGFs
strategic orientation
and HRM practices
Firm characteristics
(sector size status) and
strategies (diversity,
cost, quality,
Seven HR elements
(internal vs. external
hiring, HR planning,
formal appraisal,
subjective appraisal,
incentive bonus, equity
HGFs often implement
HRM and cost control
systems that vary
depending on the rms
strategic orientation
and product diversity;
large HGFs have
extensive internal job
markets; smaller HGFs
hire mainly externally
HRM practices, strategy
Feeser and Willard
39 US HGFs identied
in Inc.s list of the
independent and
publicly traded rms
and a similar set of 39
low-growth rms in SIC
3573 (electronic
Growth calculated over
a four-year period with
sales the starting year
between $100,000 and
$25 million
Mean annual growth
was 62.5%
Bivariate analysis using
cross-tabs and chi-
square statistics
Founding team
relatedness, founding
team size, stability in
focus, timing of entry,
geographic focus
Compound rate of
growth of sales
HGFs are more likely
than the comparison
group to have larger
team sizes, maintain
initial product/focus,
and be exporters
Human capital, strategy
R. Demir et al. / Long Range Planning 50 (2017) 431e456434
Willard et al. (1992) 155 manufacturing
HGFs identied in Inc.s
list of the fastest-
growing independent
and publicly traded
rms; 110 were
founded by the CEO
Growth calculated over
a four-year period with
sales the starting year
between $100,000 and
$25 million
Mean annual growth of
the HGFs was 151%
Bivariate statistical
analysis using t-tests
rms, professionally
managed rms
Compound annual rate
of growth in sales
No difference between
HGFs managed by a
founder or a non-
founder for a number of
measures (i.e., rm
sales growth, sales, net
income, return on
equity, return on sales,
or sales per employee)
Siegel et al. (1993) 1600 small rms in
Pennsylvania (mean
sales $1.35 million,
min: $100,000, max:
$15 million) matched
with 105 private rms
located throughout the
United States and
audited by Price
Waterhouse (mean
sales $10 million, min:
$200,000, max: $48
Annual sales of 25%
over a three-year
Discriminant analysis of
the likelihood of
belonging to the sample
of HGFs
Nature of product or
service, nature of
nancing, management
focus, planning
orientation, sales/cost
history, start-up team
Absolute, compound
annual sales growth
HGF managers have
longer industry
experience in the same
sector, technology-
focused products, and
functionally balanced
leadership teams
Human capital, strategy
Todd and Taylor (1993) 46 UK rms that grew
from 1980 to 1990
drawn from samples of
the London Stock
Exchange, the Unlisted
Securities Market, and
data on unlisted rms
Firms with growth
rates of more than 20%
per year over the period
1980e1990 (52% of
Descriptive analyses Changes in external
environment as well as
descriptions of
competitive strategy
Growth rate in sales UK HGFs beneted
from freer credit
markets in the 1980s,
shifting from internal to
external (e.g. bank-
based) sources of funds;
successful HGFs often
focus on a market niche
by building close
relationships with
Fischer et al. (1997) Interviews with top
managers in eight
organizations that had
either recently
achieved several years
of high growth or were
relatively young and
attempting to grow
Five rms growing at
more than 20% a year
and three comparison
rms growing at or
below the average for
their industry
Comparative case study
of eight rms that
either had recently had
several years of rapid
growth or were
relatively young and
attempting to grow
selectivity, and shaping
of time and events
Enactment of time to
facilitate rapid growth
Simultaneity (i.e., focus
on events in the present
and future outcomes
desired), selectivity
(i.e., search for
customers and staff
who share a pace in
congruence with the
rms goals), and
shaping (i.e., adopt/
develop systems and
procedures that allow
managers to shape a
collective view of time
in their rm) are
important for HGFs
HRM practices,
strategy, innovation
Brüderl and
orfer (2000)
56 HGFs among 1291
start-ups from the
Munich Founder Study,
a stratied random
Growth rates of 100% or
more over four years
Logit models on the
likelihood of becoming
an HGF
Four categories of
variables: founder
business strategies,
Rapid growth (relative
sales, employees, and
four-year survival)
HGFs have larger team
sizes and founders with
experience and pursue
Human capital,
(continued on next page)
R. Demir et al. / Long Range Planning 50 (2017) 431e456 435
Table 1 (continued)
Author(s) and (Year) Sample HGF denition Analysis Independent
Dependent variable(s) Findings Driver(s) of high
sample of 6000 rms
registered by the
chamber of commerce
in 1985e1986 in
Munich and Upper
Bavaria, Germany
rm characteristics,
and environmental
an innovative
strategymore often
than other new
Gundry and Welsch
240 HGFs and 263 non-
HGFs run by women in
a survey of rms
randomly sampled by
industrial sector in the
United States from
Duns marketing
HGFs dened as those
rms whose sales
exceeded the industry
average (23% or higher
over a two-year period)
Statistical analysis
using t-tests, factor
analysis, and MANOVA
Financing sources Perceived importance
of various success
HGFs tend to (1)
emphasize market
growth and
technological change,
(2) show willingness to
sacrice on behalf of
the business, (3) plan
for business growth, (4)
use team-based rm
designs, and (5) focus
on leadership questions
Almus (2002) Stratied sample of
1949 German start-ups
between 1990 and
1993 drawn from the
ZEW Entrepreneurship
Top 10% growing rms
in the sample
Probit models on the
likelihood of becoming
an HGF
Start-up year, industry
sector, founder size,
founder human capital,
region population
High growth HGFs more often have
PhDs on their founding
teams but not larger
Human capital
Markman and Gartner
Three cohorts of Inc.s
500 rms followed for
three years (1992
e1996, 1993e1997,
and 1994e1998)
Growth rates of 500%
e31,000% over ve
years in terms of sales
or number of
OLS regression of
employment and sales
growth on an ordinal
scale of prot level
Firm age, sales growth,
employee growth
Prot growth High growth in sales or
number of employees is
not related to rm
protability, while
younger rms
experience slightly
higher protability
Fischer and Reuber
Focus group interviews
with six founder-
managers of HGFs,
three policy experts,
four venture capitalists,
four bankers, six
consultants, three
academics, and a
152% increase in
employment over a
seven-year period
Focus group interviews
on owners, advisors,
and policymakersview
on how HGFs should be
Roles of management,
resource providers, and
government for HGFs
perspectives of
advisors, and
Founder-managers are
self-sufcient as
managers compared to
advisors and
policymakers and
prefer controlled
growth; advisors see
no role for policy, but
founder-managers do
Human capital, HRM
Florin et al. (2003) 275 independent US
rms that went public
in 1996 with fewer than
800 employees and less
than $500 million in
No clear denition.
Some rms going
public shortly after
founding,some 30þ
years after
Mean age at IPO was
7.22 years, and mean
sales at IPO were $475
million, indicating most
are HGFs
OLS regression of
human resources and
social resources on
sales growth
Human resources
(industry þstart-up
experience þventure
capital directors), social
resources (rm and top
management team
networks and
Sales growth Human resources are
positively associated
with sales growth only
when they interact
with social resources,
suggesting that HGFs
are more protable
when social resources
are high
Human capital,
R. Demir et al. / Long Range Planning 50 (2017) 431e456436
Littunen and Tohmo
44 HGFs and a control
group of 45 non-HGFs
in the Finnish metal-
based manufacturing
and business service
industries surveyed
biannually 1990e1997
152% increase in
employment over a
seven-year period
Cluster analysis and
logistic regression
34 variables related to
strategy, co-operation
with other rms,
decision making,
management style,
characteristics, and
High growth HGFs exhibit reliance
on management with a
group management
styleand more often
use external expert
help during start-up;
HGFs also adapt in
production and
marketing and expand
their network more
often than non-HGFs
Human capital, strategy
Barringer et al. (2005) Randomly selected a set
of narrative case studies
consisting of US
regional or national
winners of the Ernst &
Young LLP
Entrepreneur of the
Year award; 50 of them
classied as HGFs and
50 as non-HGFs (i.e.,
slow growers)
Three-year compound
annual growth rate of
80% or higher
Content analysis of
narratives with
subsequent t-tests of
narratives across HGFs
and non-HGFs
Several variables within
four categories:
founder characteristics,
rm attributes,
business practices,
HRM practices
High growth HGFs are distinct from
non-HGFs in three
founder attributes
(industry experience,
education, an
entrepreneurial story),
three rm attributes
(commitment to
growth, mission
statement, inter-
relationships), two
business practices
(unique value creation
and customer
knowledge), and four
HRM practices
(training, employee
development, nancial
incentives, stock
Human capital, HRM
practices, strategy
Nicholls-Nixon (2005) 15 founder/CEOs of
high-growth SMEs in
Canada interviewed on
how to manage rapid
Firms 4e13 years of age
with 30e2500
employees and annual
sales of $10e$390
million having
experienced mean
annual sales growth
over the past three
years between 35% and
Interpretation of
interview transcripts
Management and
leadership style
Protable growth The management of
HGFs involves
capturing and sharing
information, building
managing politics, and
having a leadership
style focusing on
facilitating rather than
directing or controlling
Human capital, strategy
Chan et al. (2006) 91 rms surveyed from
the best-managed
Canadian rms with
sales between C$10
million and C$1 billion
that were Canadian-
majority owned; rms
were selected by a
committee of ve
judges from academia
and private practice
Firms with sales C$10
million and C$1 billion
and three or more years
of consecutive sales
Bivariate analysis using
cross-tabs and chi-
square statistics for a
survey about the top
three business
Firms below C$ million
in sales more often
report external
challenges; otherwise,
challenges are uniform
across different group
sizes and industries
Growth challenges in
customers and
marketing, managing
growth, nances,
leadership, human
resources, environment
Regardless of size, all
HGFs expressed
identical frequency of
challenges regarding
managing business
human resource
Capabilities, HRM
(continued on next page)
R. Demir et al. / Long Range Planning 50 (2017) 431e456 437
Table 1 (continued)
Author(s) and (Year) Sample HGF denition Analysis Independent
Dependent variable(s) Findings Driver(s) of high
ORegan et al. (2006) 207 HGFs randomly
sampled from a
database of 15,000
small rms in the
United Kingdom
Sales growth rate of at
least 30% per year for
three or more
consecutive years
Tabulations without
univariate or bivariate
Innovation; ownership;
capabilities; strategic
environment; e-
Sales growth HGFs are not more
likely to invest in R&D
or launch new products
but are more likely to
have a prospective
strategy for identifying
growth opportunities ,
as compared to other
Sims and ORegan
207 HGFs randomly
sampled from a
database of 15,000
small rms in the
United Kingdom
Index of (1) employee
growth, (2) sales
growth, (3) prot
growth, and (4) prot
margin growth
Univariate ranking of
the four growth
supplemented with
CEO interviews
Customer service,
identication of new
markets, networks and
relationships, strategic
planning, HRM
practices, agility
Increased employees,
increased sales,
increased prots,
increased prot margin
HGFs are often
managed by CEOs
under 40 years old;
interviewees stressed
networks and
important for growth
Human capital, HRM
practices, strategy
Ensley et al. (2007) Longitudinal study of
family and non-family
HGFs drawn from Inc.s
500 list surveyed
Mean three-year
growth rate between
1,591% and 2,084%,
yearly mean employees
ranging from 53 to 95,
and yearly mean sales
ranging from $6.5
million to $14.5 million
Structural equation
model (SEM) with stock
option dispersion and
pay dispersion tted to
perceptual measures of
conict and eventually
to rm growth
Long-term stock
options dispersion and
short-term pay
(contingency variables:
cohesion, conict,
potency, pay
Revenue growth,
employment growth
Group dynamics, such
as cognitive conict,
team potency, and
group cohesion,
positively relate to
growth, while affective
conict negatively
relates to growth
HRM practices
Moreno and Casillas
6692 SMEs selected
from a homogeneous
database of rms in
Spanish Andalusia
Percentage of three-
year growth (1998
e2001) more than
100% higher than
median growth in the
same industry sector
Discriminant analysis Firm size; rm age;
availability of nancial
resources; existence of
slack (non-nancial)
Relative sales growth HGFs foster growth
through the use of idle
rm-specic resources
that are non-
transferable to other
Coad and Rao (2008) 2113 US rm in SIC
sectors 35e38 from the
Compustat database
matched with the NBER
patent database
Firms at the top 10%
growth distribution
Fixed-effects panel
models and quantile
regression of how
innovativeness (i.e.,
applications þR&D)
affects sales growth
Patent applications,
Sales growth In all four sectors
innovativeness is of
crucial importance for
sales growth among
HGFs but not among
moderately growing
olzl (2009) 21,232 manufacturing
rms from the
Community Innovation
Survey in 16 European
countries over the
period 1998e2000;
HGFs and non-HGFS
matched using
propensity score
Firms in the top 10%
and 5% growth
distribution with a rm
size of less than or
equal to 250 employees
in 1998
Quantile regression of
how six indicators of
formal and informal
R&D affect the growth
of HGFs and non-HGFs
Firm size, export ratio,
share of staff with
college education,
industry R&D intensity;
industry product
Employment growth HGFs are only more
innovative than non-
HGFs in countries close
to the technological
Human capital,
R. Demir et al. / Long Range Planning 50 (2017) 431e456438
Stam and Wennberg
647 Dutch rms
followed from 1994 to
2000 in the Start-Up
Panel: Cohort 1994
drawn from a random
sample of all Dutch
rms registered as
independent start-ups
in 1994
10% fastest-growing
rms in terms of
OLS regression on
determinants of rm
growth and the
likelihood of high
R&D, founding team
size, alliances,
and industry
Likelihood of high
R&D, founding team
size, and managers
leadership and industry
experience are
positively associated
with the likelihood of
high growth
Human capital,
Baum and Bird (2010) 312 founder-managers
in rms belonging to
the largest print and
graphics trade
association in the
United States
intentions to grow their
rms to þ100
employees in 10 years
SEM model (LISREL)
with moderation effects
Emotional intelligence;
social intelligence;
successful intelligence;
entrepreneurial self-
efcacy; swift action;
improvement actions
Growth: Index of
compound annual sales
growth þcompounded
annual employment
growth (2001e2005)
The constructs
successful intelligence
and entrepreneurial
self-efcacy are fully
mediated by swift
action and multiple
improvement actions in
predicting with new
venture growth
Human capital
Goedhuys and
Sleuwaegen (2010)
947 rms from the
World Banks 2006
Investment Climate
Survey in Angola,
Burundi, Rwanda,
Congo, Guinea Bissau,
Guinea, Tanzania,
Gambia, Swaziland,
Botswana, and Namibia
At least 10% annual
employment growth in
2002e2005 for owner-
manager rms in
industries with more
than ve employees in
OLS and quantile
Producing product
innovations, owning
means of
transportation, and
having access to
Employment growth Product innovation is
positively associated
with becoming an HGF,
but process innovation
is negatively associated
Parker et al. (2010) 121 HGFs sampled in
1995 from the British
ICC/One Source
database interviewed
in November 1996 and
followed until 2001
Independent rms with
sales between £5
million and £100
million and annual
sales growth exceeding
Multinomial logit of
Strategy; environment;
structural variables
(e.g., geographical
location and rm age)
Sales turnover growth Product development is
negatively associated
with becoming an HGF,
but active use of the
marketing department
is positively associated
HRM practices, strategy
Barbero et al. (2011) Interviews with 100
CEOs of rms sampled
from the SABI database
Firms below 500
employees with 10þ
annual sales growth
Logistic regression on
type of growth
Firms capabilities in:
Organization, HR,
Marketing, Finance
Growth by market
expansion, product
Marketing and nancial
capabilities are
positively related to
both growth by market
expansion and growth
by product innovation
innovation, HRM
Keen and Etemad
1,140 Canadian HGFs
from Canadian Business
annual list; rms
categorized in
employment size
classes: micro (1e9),
small (10e99),
medium, (100e499),
and large (500 or more)
Fiveþyears of annual
sales growth, 179% þ
ve-year sales growth,
$100,000 þin base year
sales, $1 million þin
Year 5 sales
Bivariate statistics with
t-tests of differences
across size classes
among HGFs
Firm size, age, and
international activities
Sales growth Growth patterns
among HGFs are similar
across the four class
sizes as well as across
regions; rms with
operations exhibit
higher growth
Human capital, strategy
Lopez-Garcia and
Puente (2012)
5,089 rms from the
Spanish National
Statistics Institutes
Central Directory of
Firms dataset with a
10% fastest-growing
rms with the highest
indicatorvalue (i.e., a
mix between absolute
Probit model with
xed-rm effects
Capital structure (total
debt/total liabilities),
human capital,
newness (dummy of
HGF age)
Employment growth
HR practices, such as
employing qualied
personnel or having a
mix of contracts
offered, are positively
Human capital
(continued on next page)
R. Demir et al. / Long Range Planning 50 (2017) 431e456 439
Table 1 (continued)
Author(s) and (Year) Sample HGF denition Analysis Independent
Dependent variable(s) Findings Driver(s) of high
sample bias toward
medium- and large-
sized rms and a slight
over-representation of
the manufacturing
and relative growth
associated with high
growth, but rm age
and access to credit are
Muurlink et al. (2012) Case studies of ve
Australian gazelles in
greater Brisbane,
Queensland, sampled
from Dun and
Who in Business
Australian database
20þemployees within
ve years of
Comparative case
Rigidity plays a role as
an independent
variable as well as a
consequence of a crisis
regardless of whether
crisis is triggered by
internal or external
Managerial rigidity in
Gazelle rms often
experience internal
stress dpositive stress
or eustress dparallel
to external shocks;
managersexperience is
not necessarily helpful
in dealing with such
Human capital
Rindova et al. (2012) Comparative case study
of Yahoo and Google,
1995e2007; data
include books and
cases, company press
releases, and historical
websites; 351 (240)
relationships with 277
(240) partners were
identied for Yahoo
93(88) product
introductions were
identied for Yahoo
(Google), representing
entries into 29 (14)
Chronological case
histories analyzing
partnering portfolios
and resource use and
nally analyzing
growth patterns
Partnering strategy;
product innovation
strategy among the two
cases in the period from
1995 to 2007
Growth in new
products and sales
The cases adapted
partnering portfolios,
with Yahoo scaling back
its portfolio in response
to declining demand for
online advertising and
Google ramping up its
portfolio to support
expanding applications
for search
Strategy, innovation
Koski and Pajarinen
Financial data for
403,058 Finnish
companies between
2003 and 2008
10% highest-growing
rms in the sample
Propensity score
matching (PSM),
differences models, and
instrumental variable
R&D subsidy,
employment subsidy,
other subsidy
Employment growth On average,
employment subsidies
are positive for
employment growth
among both start-ups
and incumbents, but
R&D subsidies are not;
HGFs are affected less
by subsidies than other
start-ups or
Lee (2014) 4858 UK SMEs drawn
from surveys
conducted by the UK
Department for
Business, Innovation
and Skills based on Dun
and Bradstreet data
Actual HGFs
identied by past and
expected employment
growth (zero to two
years); Potential
HGFsare then
identied using PSM
according to their
similarity to HGFs
PSM on difference
between actual and
potential HGFs þprobit
models on perceptions
of problems among
Introduction of product
innovation, process
innovation, change of
ownership, multiple
directors, advice taken
from elsewhere
Status as HGF
(compared to potential
HGF or non-HGF) and
perception of problems
HGFs perceive
problems in
recruitment, skill
shortages, obtaining
nance, cash ow,
management skills,
nding premises
Potential HGFs perceive
problem in demand,
nancing, cash ow
and management skills,
but seldom perceive
regulation problems
Human capital
R. Demir et al. / Long Range Planning 50 (2017) 431e456440
Coad et al. (2014b) 50,000þrms and
employed in the total
population of HGFs
during 1999e2002 in
Swedish knowledge-
intensive sectors
1% fastest-growing in
employees; 5% fastest-
growing in employees;
1% fastest-growing in
sales; 5% fastest-
growing in sales
Probit models on the
likelihood that an
individual is employed
in an HGF and becomes
hired by an HGF
Employee age,
education, nationality,
unemployment history
Being hired in an HGF HGFs are more likely to
employ young people,
poorly educated
workers, immigrants,
and individuals who
experience longer
periods of
HRM practices
Ryzhkova (2015) Managers of 102
Swedish gazelles
sampled in 2010 from a
database of 1078 rms
created by the daily
business press outlet
Dagens Industri
Sales over 10 million
Swedish Krona, 10þ
employees, continuous
early growth in sales
and positive results,
and doubled sales
during the past three
years based on organic
growth (not mergers
and acquisitions)
Logit models Cooperation with
customers; co-
operation supported by
ICT; ofine
collaboration; all
measured as 1e5 Likert
questions from the
Community Innovation
The introduction of
service innovation,
process innovation,
radical innovation,
incremental innovation
Interacting with
customers using online
methods is positively
associated with
gazelleslikelihood of
service innovations but
not with their
likelihood of process
innovations; overall
cooperation with
customers is positively
associated with
gazelleslikelihood of
radical innovations
Strategy, innovation
Senderovitz et al.
964 surveyed HGFs
corrected for rms that
terminated between
2008 and 2010
(N ¼251)
Firms grew at least
100% in gross protina
four-year period (2004
e2007) and had gross
prot above 0.5 million
Danish Kroner
Probit model to adjust
the estimation of OLS
Employee growth
moderated by strategic
Protability dreturn
on equity (ROE)
orientation moderates
the link between rm
performance (ROE) and
Human capital, strategy
R. Demir et al. / Long Range Planning 50 (2017) 431e456 441
managers (Chan et al., 2006; Gundry and Welsch, 2001; Lee, 2014) or by contrasting the perspectives of managers, advisors,
and policymakers (Fischer and Reuber, 2003). Three studies (7%) individually looked at protability or some type of inno-
vation as the dependent variable, all using quantitative analyses. Two studies each looked at specic HRM practices in HGFs
(Barringer et al., 20 05; Fombrun and Wally,1989) or the ways HGF managersand employeesenactment of timeand pace
affect their ability to grow and overcome periods of economic distress (Fischer et al., 1997; Muurlink et al., 2012). One study
took employeesperspective and looked at the likelihood of workers with differential characteristics to be hired by an HGF
(Coad et al., 2014b).
The rightmost column in Table 1 illustrates the drivers of high growth in studies to date. Approximately half of the studies
(18) addressed only one driver of high growth, with 16 studies addressing two drivers, and only ve studies focusing on three
drivers. Our coding of the reviewed studies shows that factors related to human capital and strategy were the two most
frequent drivers with 20 (51%) and 19 (49%) papers, respectively, dealing with these issues. Eleven (28%) of the papers dealt
with the effects of HRM practices on high growth, and 10 (26%) papers dealt with innovation. Lastly, ve studies (13%) dealt
with the capabilities of HGFs or their founders or managers and their effects on high growth. We address elements of each
identied factor driving high growth throughout the next several sections.
Human capital in HGFs
Human capital is the most prevalent theme in the literature on the strategic management of HGFs, with no less than 20
(51%) studies of the 39 reviewed addressing this topic. Our review reveals a number of important factors related to the human
capital of the HGF and its founders or managers. In carrying out our review, we were guided by Coffs (2002, 108) denition of
human capital as knowledge that is embodied in people.The literature on HGFs addresses various forms of human capital,
including the educational level and skills of founders-managers, management experience, cognitive abilities, and domain
expertise (e.g., industry, market, and technology experience). We discuss each of these elements below in relation to high
Education and skills
A fundamental element of human capital consists of education and skills. Several studies in our review highlighted the
importance of founderseducational level for high growth (Almus, 2002; Barringer et al., 20 05; H
olzl, 2009; Senderovitz et al.,
2016). These studies, however, used different proxies for education. For instance, skills and salary levels were used inter-
changeably as measures for education. H
olzl (2009) measured the skill intensityof HGF staff based on the proportion of staff
with tertiary education. Lee (2014) used survey-based self-perceived questions to assess the role of general and managerial
skills for high growth. Lopez-Garcia and Puente (2012) measured the skill level of Spanish HGFs in terms of the wage premium
paid regressed by the length of employment contracts (in order to exclude low-wage temporary contracts). Further, direct
measures of education among studies in our review ranged from unskilled workerto professor(Almus, 2002), college
educationto higher education(Barringer et al., 2005), and primary schoolto long higher education(Senderovitz et al.,
2016), to highlight a few.
Our review, however, reveals signicant differences of the importance of founder-managersand employeeseducation
and skills for high growth. Early empirical studies identied positive relationships between HGF founderseducation level
(i.e., high level of schooling) and high growth (Brüderl and Preisend
orfer, 2000). Almus (2002) found that the educational
level of both the founder-managers and all team members (founders or managers) are important, concluding that rms of
entrepreneurs with a high human capital endowment [PhD or professor level] are more likely to experience fast growth
(Almus, 2002, 1506). Similarly, Barringer et al. (2005) found a positive relationship between college education and high
growth among founders of HGFs. Other studies have concluded that the skill level of employees is an important predictor of
high growth (Lopez-Garcia and Puente, 2012) and that the lack thereof among managers is a signicant impediment to high
growth (Lee, 2014).
Surprisingly, our review reveals that the effects of employeeseducation and skills for high growth seem to differ from the
effects of founder-managerseducation and skills. For example, H
olzl (2009) found that higher educational levels (i.e., skill
intensity) among employees were positivelycorrelated with rapid growth but only among HGFs in southern and continental
European Union member states. Further, they found that the relationship was negative for HGFs in new member states of the
European Union (i.e., Slovenia, Slovakia, Estonia, Hungary, Czech Republic, Lithuania, and Latvia). Coad et al. (2014b) found
that HGFs in Sweden tend to employ young poorly educated workers, immigrants, and individuals who have experienced
longer unemployment periods.
In summary, the studies on education among founder-managers and employees for high growth reveal two patterns. First,
they highlight the differential role of education among founder-managers versus employees in HGFs. Second, they show that
the education of founder-managers, despite being measured in different ways, is an important driver of growth.
Management experience
Another key element of human capital in HGFs consists of management experience as a form of specic human capital.
While this particular aspect received limited attention among the studies in our review, the results are quite consistent in that
R. Demir et al. / Long Range Planning 50 (2017) 431e456442
there is a positive correlation between previous management experience and high growth (Brüderl and Preisend
orfer, 2000).
One reason for the positive effect of management experience on high growth is that previous knowhow, connections, and
understanding of the rules of the gamecreate the fertile ground and condence through which founder-managers enter the
market with larger initial size and employ growth-oriented market strategies (Brüderl and Preisend
orfer, 2000). Similarly,
Stam and Wennberg (2009) showed that previous management experience increased the growth rate of Dutch HGFs. Baum
and Bird (2010) also found a positive correlation between management experience and the size and age of the HGF in a study
of US rms. The authors suggested that larger and older HGFs have chief executive ofcers (CEOs) who have previously
acquired relevant managerial experience from being founders and having faced similar challenges previously.
Our review further reveals that management experience is made up of a number of critical practices for realizing high
growth. As implied by Baum and Bird (2010) and as illustrated by Nicholls-Nixon (2005), successfully managing an HGF is
dependent on management practices for creating a viable vision, employing the right people, and instilling a sense of self-
organization (e.g., supporting collaboration, empowering individual decision-making, maintaining real-time responsive-
ness) among employees. Such management practices are noteworthy as HGFs are particularly prone to being exposed to
organizational complexity and volatility stemming from the nature of their growth (Nicholls-Nixon, 2005). Hence, the lack of
such management experience can hinder high growth (Lee, 2014).
While our review shows that management experience is an important component of HGF founder-managershuman
capital, we also nd that studies that pay attention to the importance of education and skills tend to neglect the role of
management experience and vice versa. We later return to discuss the potential need for future research to provide more
integrative measures of human capital as a multidimensional construct as is often done in the strategic management liter-
ature (Coff, 2002).
Cognitive ability
Although founder-managerscognitive ability is a rarely used dimension of human capital, two studies of HGFs pointed to
the importance of this ability as a driver of high growth. Baum and Bird (2010) studied the extent to which CEOspractical,
analytical, and creative intelligence support both swift action and multiple improvement actions in order to reach high
growth. Their results show that all factors, both individually and more so in combination, predict new venture growth. They
further noted that one important aspect dsuccessful intelligence dis responsive to training and practice(Baum and Bird,
2010, 407), suggesting the need for the renement of managerial practice the longer HGF founders and managers operate the
Further, managerscognitive abilities do not necessarily go hand in hand with higher education. Muurlink et al. (2012)
found that highly educated HGF managers are at risk of being cognitively stymied when responding to crises. While
Muurlink et al.s (2012) ndings suggest initial negative effects of education on managerscognitive ability to respond to high
growth, Baum and Birds (2010) results point to a cognitive advantage of further training and development after some relevant
practical knowledge of managing HGFs has been accumulated. Together, these ndings suggest that further education and
training may help managers of HGFs respond innovatively to the challenges of high growth, but only to the extent that the
initial formal education of managers has been revised with the practical wisdom received from exposure to high-growth
In sum, our review reveals that founder-managerscognitive ability is both directly linked to high growth and moderated
by higher education (negatively) and practical knowledge (positively). Although these studies are important rst steps in
addressing cognitive ability as part of the human capital construct, the scarcity of studies reveals an important gap in the
literature as to what role cognitive ability plays for high growth, its relation to other elements of human capital, and the
circumstances under which it favors or stymies high growth.
Domain expertise
Finally, our review uncovers domain expertise as an important element of human capital in relation to high growth. In fact,
the reviewed studies identied select areas of expertise that are important for high growth. For parsimony, we address these
different types of expertise collectively under the umbrella domain expertisebut present them using their original terms
The foremost domain expertise in the studies reviewed is industry experience. Several studies showed that owner-
managersindustry experience is a strong predictor for high growth (Barringer et al., 2005; Florin et al., 2003; Siegel et al.,
1993). Industry experience is often measured as a simple indicator (Brüderl and Preisend
orfer, 2000; Stam and Wennberg,
2009) based on the number of prior assignments within the focal industry (Florin et al., 2003) or on length of prior as-
signments as determined by the number of years an individual has been in his or her current industry (Barringer et al., 2005;
Siegel et al., 1993). For example, Barringer et al. (2005) found that HGF founder-managers more often than not have greater
prior industry experience compared to founders of slow-growth rms. Prior related experience is argued to provide founder-
managers with critical domain-specic knowledge of specic technologies, customers, and distributors, including access to a
network of business partners relevant for achieving growth in the industry (Florin et al., 2003).
Several studies also highlighted the importance of founder-managersentrepreneurial experience for high growth (Florin
et al., 2003; Shuman et al., 1985; Stam and Wennberg, 2009). The argument for entrepreneurial experience as a driver of
R. Demir et al. / Long Range Planning 50 (2017) 431e456 443
high growth is that such experience is important in transposing knowhow from previous entrepreneurial endeavors to the
new venture, thereby impacting its survival and growth (Florin et al., 2003). The importance of prior entrepreneurial
experience, however, has been argued to be contingent on other factors. As an example, Brüderl and Preisend
orfer (2000)
showed that the positive effects of prior entrepreneurial experience on high growth diminish if founders have more edu-
cation, management, and industry experience. Feeser and Willard (1989) also showed that HGF founder-managersprior
experience is important for thinking bigstrategies. Siegel et al. (1993) also found that the importance of entrepreneurial
experience diminishes if HGF founders have greater industry experience.
Consequently, it seems that entrepreneurial experience can be substituted by other forms of experience in founders
domain expertise. Our review indicates that domain expertise is an important component of human capital and possibly
contingent on other elements of the human capital construct, such as education and management experience. This nding
highlights the signicance of human capital as a whole and its various elements for better predicting high growth. Notably,
our review showcases the importance of adequately theorizing the human capital construct in order to more effectively
capture the arguments for why it may lead to high growth.
Our review reveals that the effects of human capital on high growth is the most focused area to date in the HGF literature
but with differential focus across studies on the roles of education, management experience, cognitive ability, and domain
expertise. We return to these issues later as part of our discussion.
Strategy in HGFs
Our review shows that the role of strategy and various strategy practices has been of long-standing interest among HGF
scholars. We identify 19 studies published from 1985 to 2015 focusing on the implications of strategy on high growth. In
identifying the role of strategy for HGF, our review was guided by Andrewss(1971)denition of strategy as a pattern of
decisions in a company that determines its objectives, purposes, or policies and produces the rms plans for achieving its
goals. Following this denition of strategy, we identify two overarching strategy practices that have a pertinent relationship
with high growth: (1) strategic planning and (2) differentiation.
Strategic planning
Early studies of HGFs were informed by the planning and positioning schools of strategy, implicitly assuming that rm
growth was contingent upon thinking bigwith a deliberate focus on product/market contingencies (Fombrun and Wally,
1989). These studies found that HGFs incrementally move from reliance on experience and intuition at the entrepre-
neurial stage to a more formalized, short-term-oriented, and inclusive butless sophisticated strategic-planning process as the
rm ages. For example, Shuman et al.s (1985) analysis of the 500 fastest-growing privately held companies across ve
different industries in the United States showed that their exceptional growth rate is directly correlated with formalized
strategic-planning practices. Notably, those rms that grew at a higher rate in their sample had well-developed procedures
for formulating business plans, including assumption testing, competitive analysis, resource-allocation planning, and rou-
tines for control and coordination. In addition to formalized, complex, and technology-based systemsand processes, research
has also highlighted managersability to set cohesive structures by shaping a collective view of time, deadlines, and pro-
duction pace in HGFs (Fischer et al., 1997). For example, Littunen and Tohmo (2003) showed that HGFs in the Finnish metal-
based manufacturing and business service industries were better prepared through plans for adapting their operations in
production and marketing more often than a control group.
In contrast, Barringer et al.s (2005) study of US rms did not nd any signicant differences between slow- and rapid-
growth rms in terms of their emphasis on strategic planning or goal setting. They did, however, nd statistically signi-
cant differences in terms of rmsvision and growth orientation (Barringer et al., 2005). However, Siegel et al. (1993) found
statistically signicant differences between HGFs and average rms with respect to using formal business plans, regularly
updating plans, and setting goals and priorities. They cautioned that strategic planning in itself is not enough to predict high-
growth(Siegel et al., 1993, 175). Other qualitative studies found that that strategic planning serves an important means for
making the necessary changes for achieving future growth (Sims and ORegan, 2006).
Differentiation strategy
HGF research has also had a persistent interest in differentiation strategy with respect to product/market choices and their
effects on high growth. Siegel et al. (1993) found that small low-growth rms tend to opt for a single-product strategy,
whereas larger HGFs have a more substantial portfolio of products sold in several markets. This helps shield the rm from the
inherent vulnerability of a single-product strategy. Further, Todd and Taylor (1993) showed that HGFs using new technology
in existing markets are able to carve outnew market segments and hence grow rapidly. Littunen and Tohmo (2003) found
that Finnish HGFs tend to exploit their established product base and market position to expand into new markets with
existing products, whereas other rms do not take this opportunity. Similarly, a study conducted in the United Kingdom by
ORegan et al. (2006) found that HGFs invest less in research and development (R&D) and introduce fewer new products to
the market, focusing rather on continually looking for new market opportunities. An additional study also found that Danish
R. Demir et al. / Long Range Planning 50 (2017) 431e456444
HGFs that pursue a differentiation strategy tend to exhibit higher protability (Senderovitz et al., 2016). Overall, the HGF
literature emphasizes a product-renement and specialization strategy over a product-diversication strategy.
The longitudinal case study of Google and Yahoo by Rindova et al. (2012) suggests that if HGFs successfully pursue a
differentiation strategy, this would likely be closely connected to following the adapting needs of technology partners and
customers. Such a core focus on customers and partners enables rms to understand market needs and hence be able to
exploit market opportunities (Littunen and Tohmo, 2003; ORegan et al., 2006; Ryzhkova, 2015).
The relationship between strategy and high growth points to a general understanding that differentiation is a strong
predictor of high growth (Todd and Taylor, 1993). The HGF differentiation literature emphasizes that high growth is more
often reached by way of a single product strategy offered to one market in the entrepreneurial stage and successively
emulated in new markets where opportunities are found (Littunen and Tohmo, 2003; ORegan et al., 2006; Todd and Taylor,
The third driver of high growth identied in our review is HRM. Our reviewed sample contains 11 studies that focus on
the relationship between HRM and high growth. These studies are rather evenly distributed across the 30 years that our
review covers. Our view of HRM is guided by Huselids (1995, 640) perspective that several related HRM practices have
the potential to enhance rm performance dextensive recruitment, selection, and training procedures; formal infor-
mation sharing, attitude assessment, job design, grievance procedures, and labor-management participation programs;
and performance appraisal, promotion, and incentive compensation systems that recognize and reward employee merit.
Hence, in reviewing these practices, HRM was treated as a bundle of practices structured as a system or a pattern of
planned human resource deployments and activities intended to enable an organization to achieve its goals(Wright and
McMahan, 1992, 298). Our review thus focuses on studies that have directly or indirectly adopted such a denition of
A distinguishing feature of HGFs is the abnormal need to recruit new employees in a short time frame. While this offers the
ability to actually grow, it also poses serious challenges for HGFs (Hambrick and Crozier, 1985). Chan et al. (2006) conducted a
systematic comparison of perceived challenges among small- and medium-sized HGFs and found that HRM practices were
equally challenging across all sectors and industries in their sample of rms. This nding further indicates the broad
importance of HRM practices for successfully managing high growth. Similar to these ndings, our review raises several key
questions regarding HRM practices in general, specically HRM practices related to employee selection, training, and
incentive compensation and their relationship with high growth.
Employee selection
Hambrick and Crozier (1985) were among the rst to identify the importance of effective HRM practices for high growth.
They found that successful HGFs put signicant effort into stafng their HR department with high-grade professionals in
advance of recruiting pressures(Hambrick and Crozier, 1985, 40). The members of the HR department, in turn, employ
elaborate search and selection practices, process far more applications than average rms, and spend signicant time on job
and corporate orientation and on onboarding for new recruits. This results in the engagement of good talent and secures the
transfer of the rms culture or ideology to new recruits. Fombrun and Wally (1989) furthered this proposition, relating the
strategies of HGFs to the extent to which they exploit internal job markets or engage in external selection processes in their
search for talent. They found that HGFs pursuing technology strategies, where the focus is on innovation or product diver-
sication, more often engage in external searches for talent. Firms that pursue a cost or quality strategy, where the focus is on
lowering unit costs or increasing product or service quality, especially among large rms, are more likely to engage in HR
planning and developing internal job markets (Fombrun and Wally, 1989).
However, the literature also raises some alternative views, especially with respect to the difculty of HR planning in HGFs.
Fischer et al. (1997) interviewed managers in eight HGFs. They found that these rms were inclined to select employees based
on their ability to handle the pace of company growth rather than based on their talent or t with the group. Specically, the
companies studied by Fischer et al. (1997) were prone to recruiting employees who had a exible mindset, were hard working
and adaptable to the current situation, and shared a common vision. However, our review shows that later research found a
potential tradeoff between high growth and careful search and selection of personnel. For example, Coad et al. (2014b) found
that HGFs in Sweden often tend to employ marginal employeeswith extensive general human capital rather than
specialized complementary human capital. Overall, these studies show that employee selection in HGFs is signicantly
dependent on the rmsgrowth ambitions and new recruitsability to enhance rm performance (Huselid, 1995).
Employee training
Several studies took employee training into consideration, implying the need for exible and alert employees in the
volatile environment of HGFs. Barringer et al.s (2005) study of HGFs in the United States showed that rms with an emphasis
on employee training and development tend to enjoy positive returns in terms of high growth. Another study on HGFs in the
United Kingdom by Sims and ORegan (2006) revealed a positive relationship between employee training and well-being
practices and high growth. Further, Barbero et al.s (2011) study in Spain identied that employee training across all levels
is particularly important for HGFs pursuing an innovation-based growth strategy.
R. Demir et al. / Long Range Planning 50 (2017) 431e456 445
To the extent that rm-specic on-the-job training occurs, it is likely that such HRM practices yield sticky competencies
that are difcult for competitors to attract and absorb. Hence, the role of training is equally adequate for growth as it may be
for the competitiveness of HGFs.
Employee and manager incentive systems
Employee retention in HGFs often revolves around the importance of adequate material compensation as employees are
regularly pushed very hard (Hambrick and Crozier, 1985), working seventy-hour, seventy-ve, or eighty-hour weeks(as
noted by a Marketing Manager of a HGF, in Fischer et al., 1997, 22). The importance of employee compensation practices was
visible in ndings from a qualitative study of a Canadian business network whose members, all CEOs of HGFs, advise other
network members and recommend consultants who had helped them develop and implement employee-shared ownership
plans (Fischer and Reuber, 2003). The value of such programs also received support in the study by Barringer et al. (2005),
who showed that HRM practices offering nancial incentives and stock options to employees had a positive relationship with
high growth.
However, the positive association between employee incentive systems and high growth may be different for top man-
agers in HGFs. Ensley et al. (20 07) studied the effects of pay and stock-option dispersion among top managers in HGFs, nding
that pay dispersion among managers negatively impedes both teamsdecision-making abilities and overall rm growth.
While the short-term effects are lower among both family-based and non-family managers, the former tend to respond
negatively to long-term pay dispersion. Ensley et al.s (2007) ndings thus indicate that family-based managers in HGFs may
be prone to affective and cognitive contagion from past family relationships.
Parker et al.s (2010) study of HGFs in the United Kingdom showed that rms that continue to grow rapidly are the least
likely to sell shares to managers and employees. One explanation provided for the reluctance to enact nancial incentive
programs is that owners of HGFs have inside information on the performance of their rms. This may make them reluctant to
share sensitive information about the future value and prospects of their rms if they expect the rm to continue to grow
along the same trajectory. Conversely, only owners who are either more uncertain or who know that the business will not
perform as well actually sell their shares(Parker et al., 2010, 224).
While several studies in our review highlighted the importance of employee-incentive systems to realize high growth, the
studies by Ensley et al. (2007) and Parker et al. (2010) suggested that poorly designed incentive programs may have adverse
effects for HGFs, especially if they are targeted to managers and employees with vested interests.
Innovation in HGFs
Innovation has long been assumed to have a positive relationship with high growth. We adopted Schumpeters(1947,151)
notion of innovation as the doing of new things or the doing of things that are already being done in a new way,including
products, services, and processes that are either new to the rm or the industry in which the rm operates. Only a few studies
in our review (10.26%) examined the relationship between new products and product innovation and high growth. These
studies employed both qualitative approaches (Rindova et al., 2012) and quantitative methods (Barbero et al., 2011; Ryzhkova,
A number of studies in our review looked at the link between innovation and high growth using measures like R&D
spending, number of patents, and amount of new products or processes introduced to the market to capture innovation. For
example, Coad and Raos (2008) study of US manufacturing rms revealed innovations in the form of patent applications and
R&D spending to be strongly associated with high growth. Stam and Wennbergs (2009) study of Dutch rms suggested
contingent effects of R&D spending and new products for rmsgrowth. These studiesndings show that overall, innovation
seems to be important for sales growth in HGFs.
Still, the role of innovation for high growth seems to differ across various economies as does the role of product versus
process innovation. In their study of African rms, Goedhuys and Sleuwaegen (2010) showed that product innovation is
positively associated with high growth but not process innovation. H
olzls (2009) study of HGFs in 16 European countries
showed that HGFs are more innovative than non-HGFs but only in countries close to the technological frontier. Studies using
smaller samples of HGFs in the United Kingdom suggested that product development may be less important for high growth
compared to a proactive marketing strategy focusing on growth opportunities (ORegan et al., 2006; Parker et al., 2010).
However, in a large study of UK rms, Lee (2014) revealed that both product and process innovation are important for high
Together, these studiesndings suggest that researchers need to probe the potentially separate roles of product and
process innovation for the strategic management of HGFs. Extant studies also argued that the role of innovation in HGFs may
be contingent on rm strategy (Parker et al., 2010; Stam and Wennberg, 2009). Senderovitz et al. (2016, 405) raised the
question of whether the contingent effect of a growth strategy is about achieving a greater share of a given xed-sized market
or whether it is about enhancing or creating a new market. As our literature review does not provide sufcient evidence to
inform us about this issue, we can only speculate. The entrepreneurship literature shows that innovative products tend to
create opportunities for new rms wanting to penetrate a pre-existing market as well as those wanting to open up new niches
R. Demir et al. / Long Range Planning 50 (2017) 431e456446
within a product or geographic market (Li and Atuahene-Gima, 2001). However, HGFs have been found to be as prevalent in
low-technology industries as in high-technology industries, suggesting that technology and products may not be the major
determining factor for high growth (Daunfeldt et al., 2016). The potential links between rmsgrowth strategy, their product
and process innovations, and the penetration of new or existing markets remain poorly studied in the HGF literature.
Capabilities in HGFs
The concept of capabilities denotes an ability to purposefully enact resources,practices, and processes as well as to change,
modify, and replace these in order to achieve certain goals or ends benecial to the rm. Our view of capabilities is inuenced
by the view that capabilities are core to the rm by way of being (1) embodied in employeespractices and (2) embedded in
the rms systems and technologies (Leonard-Barton, 1992). The emphasis on rm-level attributes distinguishes the concept
of capabilities from that of human capital, although one must bear in mind that individual-level capabilities are to some
extent contingent upon the individuals human capital, such as accumulated experiences. While related, organizational ca-
pabilities are different from individual capabilities since the prior reects processes and relationships for coordination
(Summers et al., 2012).
Although the role of capabilities is one of the most important dimensions of the study of growth (Penrose, 1959), only ve
studies in our review highlighted the importance of capabilities for high growth. These studies addressed three different
capabilities for high growth: managerial, nancial, and innovation. Studies that addressed the link between high growth and
managerial capabilities also highlighted the importance of organizational capabilities for high growth as these studies tended
to treat both managerial and organizational capabilities as overlapping in HGFs. For example, Barbero et al. (2011) referred to
managerial capabilities as a compilation of several other capabilities, including organizational, HR, marketing, and nancial
capabilities. Chan et al.s (2006) conceptualization of organizational capabilities involved managerial abilities to handle
different types of strategic challenges in HGFs. They found that the managerial ability to identify and overcome competitive or
organizational barriers distinguished HGFs from non-HGFs. Willard et al. (1992) further revealed that HGF founder-managers
are as capable as non-founding managers in terms of managing high growth. To some extent, this nding ends the debate as
to whether different managerial capabilities are needed in different phases of HGFs. Finally, Florin et al. (2003) tested HGFs
ability to compete for customers and limited resources by measuring human, social, and nancial capital as proxies for
venturesmanagerial capabilities. They found that ventures that were capable of accumulating more nancial capital tend to
grow faster.
As noted above, HGF research has also highlighted the importance of nancial capabilities in driving high growth. For
example, Barbero et al. (2011) measured nancial capability as (1) budgeting and cash-ow management, (2) availability of
nancial capital, (3) nancial reporting processes, (4) analysis of nancial statements, and (5) cost control (i.e., boot-
strapping). Using these measures, they found positive relationships between nancial capability and two distinctive growth
paths dmarket expansion and product innovation damong their small sample of HGFs (only 89 rms). Further, Moreno and
Casillas (2007) found that nancial capital itself was negatively correlated with high growth, but the higher the growth of the
rm, the more the rm relied on its capability of capturing opportunities that required fewer nances da form of nancial
capability of doing more with less (Baker and Nelson, 2005). This nding is in line with Florin et al. (2003), who emphasized
that rmsability to attract funds is a more critical resource than the funds themselves. Finally, Stam and Wennberg (2009)
found that new high-tech rmssuccessfully enjoyed exceptional high growth rates from their R&D capability. Put differently,
innovation capability was theorized as an organizational-level dynamic capability that facilitates exceptional growth among a
select group of HGFs dnew high-tech rms.
All in all, there is a relatively limited but nevertheless important part of the HGF literature that addresses the role of rm
capabilities in driving growth. These studies focused on managerial capabilities, nancial capabilities, and innovation ca-
pabilities. There is less debate about which of the capabilities are the most important; rather, the studies showed that ca-
pabilities are important for driving growth. However, the studies had multiple views and operationalizations of capabilities,
and each focused on different aspects and timing of growth.
A framework for the strategic management of HGFs
Our review suggests that while some progress in research on the strategic management of HGFs has been made, the ve
different drivers of high growth (human capital, strategy, HRM, innovation, and capabilities) that we found have tended to be
studied in isolation from each other, with approximately half of the studies in the review addressing only one driver. As we
reviewed the main ndings in the literature, we were able to identify a number of opportunities for continued theory
development and deeper empirical insights building on the contributions of research on HGFs. Our focus is on discovering
how the ve drivers can work together das contingencies drather than adding numerous other factors into the mix. We do
this as we believe that additional factors will only further fragment the research on HGFs rather than help bring it closer
In Figure 1, we build on the outline of factors driving high growth from Section 3 with a keen focus on areas for future
research based on strengthening the direct relationships of the ve main drivers and the potential contingent relationships
between these factors and high growth. To that end, the model does not represent a full-edged theory or framework for the
strategic management of HGFs. Consistent with most studies reviewed here, we consider high growth as the dependent
R. Demir et al. / Long Range Planning 50 (2017) 431e456 447
variable, as depicted in Figure 1. We consider each of the ve drivers as independent variables vis-
a-vis high growth and as
moderating variables in relation to other variables in the framework. Hence, the framework outlines a set of theoretical
factors (i.e., drivers) and a set of contingent mechanisms moderating these factors. The factors and contingent mechanisms
are further grounded in the HGF literature we have reviewed here.
As depicted in Figure 1, the accumulated evidence in our review suggests a direct relationship between human capital and
high growth. Several studies related to strategic HRM also lead us to suggest the moderation of the relationship between
human capital and high growth by effective HRM practices (see the dotted line from HRM to human capital), such as on-the-
job training (Barringer et al., 2005). Our review also suggests a direct relationship between HRM and high growth. This is
illustrated in the solid line between the two variables. The strategy of the HGF is another major predictor of high growth, as
depicted in Figure 1 (see solid line). We also suggest that strategy affects the relationship between HRM and high growth as
strategy tends to favor certain recruitment patterns as well as innovation and high growth (see dotted lines). The fourth
component of the framework (i.e., innovation) distinguishes the focus of HGFs on activities like R&D and new product
development and its direct relationship with high growth, as depicted in the line between innovation and high growth. Our
review further suggests that innovation may moderate the relationship between rm capabilities and high growth (see
dotted line). Finally, our framework suggests a direct link between HGFscapabilities and high growth, as indicated by the line
leading to high growth. The purpose of this framework is to outline potential areas of study, including some areas for which
the extant literature is equivocal on the direct effects.
In the remainder of this section, we will present the underlyingrationale for how each factor, or driver, is directly linked to
high growth and the theoretical rationale by which it is thought to moderate the relationship between other factors and high
growth. Our presentation follows the order in which each driver is depicted in Figure 1.
Human capital and high growth
Findings related to the human capital of HGFs suggest some important considerations of the human capital construct in
relation to predictions of high growth. Our immediate observation from a large number of studies is that human capital is a
driver of high growth (see solid line in Figure 1) through the education and skills of key employees, the experience of founder-
managers, the cognitive ability of managers, and the domain expertise of founder-managers. These human capital elements
are worthy of further attention and renement following recent developments in the strategic management literature. Future
research may seek to extend the research on human capital for high growth by investigating its potential impact on inter-
mediary strategic outcomes, such as managerial cognition (Kaplan, 2011) or opportunity attention (Shepherd et al, 2016), to
provide a more in-depth explanation of how managers are able to achieve high growth. These lenses provide powerful
concepts for studying growth-oriented managerial behaviors (e.g., Greve, 2008). Nevertheless, although the concept of
Figure 1. A conceptual model of strategic drivers of high growth
R. Demir et al. / Long Range Planning 50 (2017) 431e456448
human capital is wide enough to cover proxies like organization memberstraining, experience, and intelligence (Becker,
1964), we see a number of potential limitations and prospects for specifying its relationship to high growth and its poten-
tial as a source of sustained competitive advantage (Coff and Rafee, 2015).
First, several studies in our review conrmed a positive and direct relationship between human capital and high growth
(the solid line in Figure 1). The most prevalent among these relationships is the impact of founder-managerseducation and
skills and high growth (Almus, 2002; Barringer et al., 2005; Brüderl and Preisend
orfer, 2000; Senderovitz et al., 2016). While
this aspect of founder-managers human capital seems well established in the HGF literature, we see further potential of
elaborating on how various compositions of human capital among top management teams (TMTs) of HGFs are related to high
growth. For example, studies of entrepreneurial ventures show positive relationships between diverse experience of TMTs
and sustained growth (Kor, 2003). Hence, the impact of TMT human capital diversity is a promising avenue for further inquiry
in HGFs.
Second, our review surprisingly reveals that prior studies have treated human capital from a more static perspective,
disregarding its changing and changeable nature. While HRM interventions, such as learning and training, are fundamental
aspects of the human capital concept, remarkably few studies in our review accounted for the roles of HRM and human capital
jointly in relation to high growth (Barringer et al., 2005; Hambrick and Crozier, 1985). More specically, prior studies over-
looked the potentially important moderating effect of learning and on-the-job training that might help increase human
capital. For example, Coad et al. (2014b) speculated that HGFs might offer relatively poorly educated workers on-the-job
training. This training provides them with rm-specic skills to allow them to become valuable to the HGF, but these
skills are rare among rms within the same industry, difcult to imitate by rivals, and not easily substitutable by generic
competencies on the market (Barney, 1991). However, this linkage is only speculative and needs further empirical grounding.
The rationale for this call is well established in the behavioral theory of the rm (Cyert and March, 1963) and in evolutionary
economics (Nelson and Winter, 1982), which account for the potential discrepancies between managerial action and envi-
ronmental change but less so in the context of high growth. Hence, understanding how HRM interventions positively change
the quality of human capital in HGFs is an important rst step for understanding how human capital can keep pace with the
rapid changes of HGFs. Thus, HGF research needs to better understand the changing role of different HRM interventions on
human capital in relation to high growth, as depicted through the dotted line in Figure 1. This suggests greater potential for
understanding the relationships between initial human capital in employees and the HRM practices that go on in HGFs.
Further, our observations reveal that learning outcomes from training and managerial experience seem to prepare
managers to act creatively and swiftly in the face of high growth (Baum and Bird, 2010) and to develop growth-oriented
market strategies (Brüderl and Preisend
orfer, 2000). However, a rms human capital is subject to adequate HRM practices
that promote knowledge accumulation, specialization, and shared attention on the HGFs growth vision (Nicholls-Nixon,
2005). The same logic may therefore apply to the extent that practical on-the-job training can develop managerial (Baum
and Bird, 2010; Brüderl and Preisend
orfer, 2000) and leadership skills (Stam and Wennberg, 2009). In general, exploring
the potential moderations of HRM practices in how human capital resources in the rm drive high growth is a notable op-
portunity for future study. This includes research that separates the human capital of both founder-managers and other
employees in HGFs as there is likely a moderation effect of initial human capital and HRM practices, such as further training,
on HGFs, as illustrated through the dotted line in Figure 1.
HRM and high growth
HRM practices vary across HGFs. However, early ndings point to the importance of developing a professional HR unit for
high growth to take place (Hambrick and Crozier, 1985). Further, the literature consistently raised the importance of employee
selection, training, and retention practices for high growth. While selecting talented workers has proven to be important for
high growth, some results indicate that exible workers (Fischer et al., 1997) as well as workers with general rather than
specialized human capital (Coad et al., 2014b) are important to sustaining high growth. Overall, there is strong evidence that
effective HRM practices are positively related to high growth. This relationship between HRM and high growth is illustrated
through the solid line in Figure 1.
While our review reveals the importance of effective HRM practices for high growth, it also highlights some areas for
further inquiry. First, our review reveals a lack of systematic studies on employee-selection practices across different stages of
the HGF lifecycle, in different industrial settings, and based on various HGF growth strategies. Prior studies highlighted the
different recruitment needs of rms with various growth levels (Rutherford et al., 2003) and found that high growth is
marginally dependent on founder-managers or professional managers (Willard et al., 1992). To our knowledge, no prior
studies have taken a life cycle approach to employee selection in HGFs, which could be important as there may be funda-
mentally different HRM strategies in rms of various stages of development. Firm-size differentials when growth is expe-
rienced are likely to involve substantial heterogeneity in terms of the processes and needs for new hires (Nason et al, 2015).
Similarly, studies have yet to investigate the need for different recruitment practices of HGFs across dissimilar industrial
settings and with different growth strategies. These industry-based dissimilarities may affect differences in best practices
across a wide range of HRM activities and needs, especially given that HGFs appear in both high- and low-tech sectors. These
topics have recurrently appeared across the studies included in our review but less so in relation to employee selection.
Therefore, we nd potential for HGF research to capture this strategic dimension of HRM by systematically studying these
aspects over time in rms of different sizes and across different industry contexts.
R. Demir et al. / Long Range Planning 50 (2017) 431e456 449
Second, despite the importance of employee training for the continued growth and competitiveness of HGFs, our review
reveals a systematic lack of research on how and what type of employee training best leverages HGFsstrategic agenda. This
neglect may potentially be linked to the fact that such data are difcult to access and compare across rms. However, this
aspect of high-involvementHRM practices and their impact on growth have proven to be adequately studied through
survey methods (Bae and Lawler, 2000). Therefore, we nd exploring the relationship between employee training and high
growth a potentially valuable way of understanding how HGFs continue to increase the value of their human capital by
preparing them for the new challenges and tasks involved within rapid growth. This area of study would specically relate to
how HRM moderates the relationship between the human capital of the rm and high growth (as illustrated in the dotted
Finally, our observation of the divergent ndings regarding the importance of incentive programs for HGFs prompts the
need for further testing how various incentive systems affect the commitment of both employees and managers to the goals
of rapid growth. Investigating this topic is an important and challenging issue as it has the potential to reinvigorate the
assumptions of self-determination theory (Deci and Ryan, 1985) in the demanding context of HGFs. Doing so could potentially
uncover the role of HRM practices in sustaining high growth, a topic we discuss in greater depth in the next section. This
relationship is illustrated by the solid line between HRM and high growth in Figure 1.
The literature also suggests a direct connection between rmsHRM practices and their most important human capital.
Since not all human capital is of equal importance to the success of the rm (Lepak and Snell, 1999), facilitating an HR ar-
chitecture that allows the rm to identify and develop the specic human capital needed to address the changing nature of
the growing rm is an important task. This is noted as causal path in the dotted line between human capital and HRM in
Figure 1.
Strategy and high growth
Our review shows that an HGFs strategy plays a central role in driving high growth (Feeser and Willard, 1990)ddirectly
through its relationship with high growth (solid line in Figure 1) and seemingly also by way of moderating the relationship
between HRM and high growth (dotted line) as well as between innovation and high growth (dotted line). First, the literature
reveals that strategic planning and forecasting problems tend to compound in HGFs (Bos and Stam, 2011; Hambrick and
Crozier, 1985), indicating the need for exible routines and process-performance adjustments along with standardized
planning cycles in HGFs (Grant, 2003). As a result, we anticipate an inevitable feature of HGFs to address adapting organi-
zational structures and systems to environmental changes (Davila and Foster, 20 05; Hambrick and Crozier, 1985). This means
that models of HGF management need to account for the often dynamic and rapidly changing organizational structure of
HGFs (Eisenhardt and Schoonhoven, 1990). Among the few empirical studies in existence to date, Keen and Etemad (2012)
found that managerscapability to drive strategy was a precursor to high growth among Canadian HGFs. Associated
research showed that major changes are required in systems, structures, and capabilities to cope with the increasing
complexity that accompanies high growth (Garnsey et al., 2006; Nicholls-Nixon, 2005).
The relationship between strategic planning and high growth demonstrated in the extant research illustrates the sig-
nicance of strategic plans for growth. However, as demonstrated in some studies (e.g., Barringer et al., 20 05), strategic plans
link with growth speed and HGF size (Siegel et al., 1993) requires further research attention. For example, future research
should address the potential of boundary conditions and limitations for the link between strategic plans and rm size and
growth speed. Do all strategic plans help growth universally, or are there various stages of rm development or industry
context (e.g. more or less dynamic environments, capital versus technology intensive) in which strategic planning may hinder
rapid growth?
The link between product-market differentiation and growth is another well-established nding in the HGF literature.
However, our review uncovers the need to better understand the link between differentiation and specialization strategies
and high growth. This call for further inquiry is motivated by the view that differentiation of both products and markets is
contingent upon the expansion and renement of the rms skills, technologies, resources, and even its organizational
structure (Ansoff, 1957)dfactors that jointly challenge the denition of HGFs. Hence, deeper knowledge is needed on how
product-market differentiation strategies increase or hinder growth and during what phase of development these strategies
affect rm growth most (as implicated by Siegel et al., 1993).
Second, our review reveals several potential ways rm strategy and HRM practices may be related to high growth. Firms
high-growth strategies have been associated with high growth by means of strategic HRM practices: Managerial practices
respond signicantly to strategy: rms pursuing either a cost strategy or a quality strategy tend to promote from within,
whereas rms pursuing a technology strategy favor external search for the best qualied candidates(Fombrun and Wally,
1989, 115, 117). This nding suggests the existence of a potentially important moderation between the HGFs enacted
strategy and the HRM practices employed. We indicate this relationship as a moderating path through the dotted line be-
tween strategy and HRM for high growth in Figure 1.
Finally, the link between rmsgrowth strategy and product and process innovations for high growth remains under-
examined. Although several studies in our review indicated the importance of a technology strategy (Fombrun and Wally,
1989) or an innovation strategy (Barbero et al., 2011), we found few empirical studies on how innovation-oriented strate-
gies moderate innovation output in relation to high growth. The lack of studies on the specic role of innovation strategies is
surprising as the importance of innovation for rm growth is well documented in the literature (Coad and Rao, 2008; Corsino
R. Demir et al. / Long Range Planning 50 (2017) 431e456450
and Gabriele, 2011; Koellinger, 2008). We see this as a potentially important area for future studies. That is, future studies
could explore how HGFsdifferent strategies moderate the link between innovation and high growth. We outline this rela-
tionship through the dotted lines in Figure 1.
Innovation and high growth
Our review shows that various forms of innovativeness dnamely, product, process, and market innovativeness dmay be
differentially related to high growth (e.g., Coad and Rao, 2008; ORegan et al., 2006; Parker et al., 2010; Stam and Wennberg,
2009). The interactive nature of innovation elements in moderating the rate of growth has been generally suggested in the
strategic entrepreneurship literature (Crossan and Apaydin, 2010; Delmar et al., 2011). However, it has not permeated
research on HGFs thus far, which we believe offers a natural extension of the literature.
Further, our review reveals that prior studies present inconsistent results as to the inuence of process innovations on high
growth. In the meantime, the innovation literature has shown some promising relationships between organizational process
innovations and rm performance (e.g., Utterback and Abernathy, 1975; Zmud, 1984). Thus, we believe that the relationship
between process innovation and high growth is a particularly promising area of study. Furthering the study of the relationship
between process innovation and growth is motivated by the view that high growth is contingent on organizational processes
and structures (Hambrick and Crozier, 1985). Recent ndings also showed discrepancies in the effects of process innovation
on growth based on rm size and age (Sapprasert and Clausen, 2012)dboth contested dening features of HGFs. One reason
for these discrepancies may be the temporal use of process innovations. The development of patentable new technologies
may fuel the initial high growth of rms as they separate from competitors (Siegel et al., 1993). Upon achieving this initial
success, HGFs may turn to process innovations in order to sustain their growth and efciency over time. This temporal aspect
may also reect varying investments into a technology strategy to promote future growth by way of major investments in
R&D(Stam and Wennberg, 2009).
Finally, our review indicates some important links between HGFsnances (Koski and Pajarinen, 2013; Stam and
Wennberg, 2009) and their nancial capabilities for innovation (Barbero et al., 2011). However, the reverse relationship
whereby innovation output affects the capabilities of HGFs remains unexplored. One such aspect that directly results from our
review is the relationship between the rms innovation capabilities and its nancial capabilities for high growth. There
seems to be a clear contradiction between the notion that necessity is the mother of invention(Baker and Nelson, 2005) and
the empirical ndings suggesting that funneling nancial capabilities toward R&D and other innovation sources leads to high
growth. This contradiction suggests a potentially important need to examine the contingency effects of these different types
of capabilities. The equivocal ndings in the literature may be resolved within the unique context of HGFs as interactions
across rm innovations and various types of capabilities could illustrate the importance of nancial capabilities for the
development and execution of other capabilities. Understandingthis link between innovation and capabilities (see the dotted
line in Figure 1) in the context of HGFs is further motivated by growth theories of the rm (Penrose, 1959).
Capabilities and high growth
Our review reveals that organizational capabilities have been sparsely studied in relation to high growth. It is surprising
that only ve studies addressed the role of capabilities given that organizational capabilities are important means for creating,
conguring, and reconguring the rms resource base and are therefore necessary for the rms growth and competitive
advantage (Barney, 1991; Penrose, 1959; Teece et al., 1997). For instance, one part of the capabilities and HGF literature
emphasized the importance of nancial resources for high growth. However, this view tends to overlook the basic notion that
nancial capabilities are not sufcient to drive growth without the ability to know how to leverage other types of capabilities
throughout the growth process (Barbero et al., 2011; Moreno and Casillas, 2007). Nevertheless, while few studies in our
review explicitly focused on the relationship between nancial capabilities and high growth, most studies acknowledged the
importance of nancial resources as being an important condition to fuel growth. An exemplary statement is found in Todd
and Taylors study of UK supergrowthcompanies: Growth requires funding, and the provision of nance is a particularly
important strategic skill(1993, 75), and those [HGFs] that are less likely to receive funds will grow more slowly(Moreno
and Casillas, 2007, 75). Hence, we expect nancial capability to be one among several important capabilities for high growth.
Our review also underscores the importance of managerial capability for high growth. Because HGFs are exposed to rapid
uctuations and changes over time that concern many different parts of the rm, we expect such managerial capabilities to be
dynamic and involve the capabilities with which managers build, integrate, and recongure organizational resources and
competences(Adner and Helfat, 2003, 1012). In the context of HGFs, this view offers two distinctive implications. First, it is
specic enough to capture HGF managersability to make and act on strategic decisions in anticipation of growth (Tushman
and Rosenkopf, 1996). There are likely some connections to the human capital of the executives and employees in these rms,
or their specic training and development, and their ability to make these decisions. Second, it is inclusive enough to serve as
a meta, or higher-order,capability upon which other capabilities are contingent and generate returns (Collis, 1994). In this
regard, our prediction resonates with the assumptions of upper echelon theory, which conceives the organization as a
reection of its managersstrategic choices and behaviors (Hambrick and Mason, 1984). Again, understanding the crossing
roots of these types of capabilities would provide additional contributions to the HGF literature.
R. Demir et al. / Long Range Planning 50 (2017) 431e456 451
Only a few studies in our review addressed three types of capabilities (managerial/organizational, nancial, innovation)
and their relationships with high growth. Given the view that capabilities should be studied as bundles when addressing
growth (Penrose, 1959), there is an obvious lack of studies examining the effects of multiple capabilities on high growth (for
an exception, see Barbero et al., 2011). Barbero et al.s (2011) observation that various but enduring capabilities have a long-
term positive impact on high growth is notable as it suggests an important supporting role for HRM capabilities in driving
growth. However, appropriate HRM capabilities also help provide greater strategic focus on product development and
innovation, suggesting that these capabilities may have higher importance during certain growth periods than others.
Equally, we suspect that capability development will be a critical factor for driving growth given the constraints imposed by
rm-environment and rm-technology mists as part of rapid growth and change, which is predicted in the dynamic ca-
pabilities literature (Helfat et al., 2007). Hence, we urge future studies to test for (1) interactions between different types of
capabilities in relation to high growth; (2) the relationship between individual capabilities and high growth, including those
addressed here and in other studies; and (3) the relationship between bundles of capabilities and high growth. Thus, we
illustrate this multi-capability linkage with high growth through the solid line between capabilities and high growth in
Figure 1.
This prediction is further supported in the business model literature, which suggests that when the rm is innovation
driven and focused on re-inventing itself as a result of environmental and technological challenges, it will have to adapt its
capabilities accordingly (Doz and Kosonen, 2010; Zott et al., 2011). This moderation effect is illustrated in Figure 1 by the
dotted line pointing from innovation to capability.
Moreover, HGF research has shown a positive relationship between high growth and the organizational capability of
managing idle (i.e., non-nancial) and nancial resources in HGFs (Moreno and Casillas, 2007). While this is in line with the
resource-based view of leveraging bundles of resources to maintain a competitive advantage (Barney, 1991), the HGF liter-
ature has not yet drawn upon the dynamic capabilities view, which predicts that the strategy in high-velocity markets is
about creating a series of unpredictable advantages through timing and loosely structured organization(Eisenhardt and
Martin, 2000, 1118). To that end, further incorporating dynamic capabilities thinking into the HGFs literature is an impor-
tant consideration for understanding the role of capabilities in driving high growth over time.
Our review reveals the existence of and potential contingencies between the ve factors that drive high growth: human
capital, human resource management, strategy, capabilities, and innovation. Extant research has predominantly looked at
these factors separately, and we believe examining them together will help further scholarsunderstanding of HGFs. In
addressing the importance of the direct effects of the ve most salient drivers of high growth as well as their potential
contingency relationships, we believe that research on HGFs is now reaching a stage where scholars are able to start to
generalize under what conditions the strategic management of HGFs can be more or less successful in achieving and sus-
taining high growth. For example, innovation in general seems to be more important for HGFs than for other rms; however,
there is less scholarly agreement about whether HGFs benet more from product or process innovations and about what the
relationship between rmsgrowth strategy and their product and process innovations means for high growth.
Another aspect unique to HGFs is the central role of the founder-manager. Our review shows that there is unequivocal
evidence that founder-managershuman capital is vital predictors of their rms achievement of high growth (Coff and
Kryscynski, 2011). However, the studies in our review dealing with founder-managershuman capital for high growth ten-
ded to neglect the role of management experience. As noted previously, future research on high growth would benet from
adopting more integrative measures of human capital as a multidimensional construct from the strategic management
literature (Coff, 2002). Research may also seek to move beyond standard measures of human capital to study cognition and
cognitive abilities as a microfoundation to other elements of human capital and the circumstances under which it favors or
stymies high growth (Helfat and Peteraf, 2015).
Finally, related to the relationship between employeeshuman capital and high growth is also the adoption of various HRM
systems. An HGFs ability to upgrade and leverage employeesskills has been shown to depend largely on HRM systems and
practices in the rm (Barringer et al., 2005), indicating important boundary conditions in terms of how human capital can
affect rmschances of realizing high growth (Coff, 1997). Despite the general importance of HRM systems related to training
and incentive schemes noted in our review, we note a lack of research on how and what type of employee training can best
leverage HGFsstrategic agenda as well as how to effectively design incentive schemes for both employee and management
From high growth to sustained growth
While there is an implicit assumption that high growth is something positive for rms and their stakeholders, there has
been little discussion of the amount of growth that an HGF should pursue. In other words, is there an optimal amount of
growth that can be sustained? The fundamental question of whether there are ideal levels of growth that allow rms to
sustain a higher level of performance or achieve a sustained competitive advantage remains unexplored in the literature on
the strategic management of HGFs. The importance for HGFs to develop their companies from initial growth spurtsto
sustained levels of high growth has been suggested in several studies (Daunfeldt and Halvarsson, 2014; Flamholtz and Randle,
R. Demir et al. / Long Range Planning 50 (2017) 431e456452
1990; Pierce and Aguinis, 2013). The strategic management literature indicates several potential problems with excessive
growth, such as managerial complexity traps and myopia (Levinthal and March, 1993; Muurlink et al., 2012) or failure to
upgrade managerial and personnel resources at different levels of growth (Penrose, 1959)dproblems that have yet to be
addressed in the literature on HGFs.
Excessive growth is closely connected to a rmsnancial health. Our review reveals that nancial issues have been
surprisingly scant in the literature on HGFs despite the obvious connection between a rmsnancial structure and its ability
to grow rapidly. Prior research has shown that nancial ability is a strong predictorof growth by acquisition, whereas it is less
so for organic growth (McKelvie et al., 2006). Understanding the links between nancial structure and mode of growth may
also help explain empirical patterns of HGFs (Delmar and Shane, 2003; Delmar et al., 2003). Nevertheless, we could only nd
two studies noting the general importance of external funding for HGFs (Todd and Taylor, 1993) and showing that HGFs often
exhibit higher nancial liquidity and solvency (Moreno and Casillas, 2007). Overall, managerial strategies to counter too
much growthand modes of growth remain an important topic for future research on the strategic management of HGFs.
Methodological implications for HGF research
An important outcome of our literature review is the lack of methodological rigor in many of the empirical studies on the
strategic management of HGFs. Two-thirds of the quantitative studies conducted in the past 30 years relied on descriptive or
bivariate statistics rather than multivariate statistics in drawing inferences between independent and dependent variables.
Only a few studies built on prior work to introduce control variables to help eliminate obvious and alternate explanations for
high growth. Further, there is a fundamental lack of studies accounting for the potential sample-selection and endogeneity
biases that comes with only studying surviving samples of HGFs (Delmar and Shane, 2003). Future research should seek to
collect data and employ methodologies that account for such potential methodological biases to more rigorously draw in-
ferences between independent and dependent variables related to high growth and over time.
Research could also draw inspiration from studies looking at extremecases deither in the form of qualitative
comparative case studies or through the use of statistical model designs for power law distributions (Coad and Rao, 2008;
Crawford et al., 2014). The lack of large-N studies with multivariate statistics and control variables derived from prior
research also means that our systematic literature review is qualitative rather than quantitative, such as would be done in a
meta-analysis. With further development in the eld and more empirical studies published using proper control variables
and reporting the effect sizes of independent variables, future literature reviews would be able to assess the accumulated
ndings in the form of meta-analyses of factors related to HGFs.
The study of HGFs has contributed a body of research that remains relatively fragmented based on differences in de-
nitions and operationalizations, for which cumulative knowledge about the broad set of factors driving high growth is lacking.
By conducting a review of extantresearch on the strategic management of HGFs, wewere able to identify ve common factors
that individually and in combination drive high rm growth: human capital, HRM, strategy, innovation, and capabilities. By
synthesizing these factors and highlighting how theories of strategic management provide opportunities for future research
on the drivers of high growth, we provide researchers with a more substantiated level of knowledge about past accom-
plishments, unresolved issues, and unanswered questions related to the strategic management of HGFs. We believe that
further examining the contingency factors among the ve key drivers will help inform more of the taken-for-granted as-
sumptions of high growth.
We are grateful for the comments from Erkko Autio, Anna Brattstr
om, Martin Carlsson-Wall, Sven-Olov Daunfeldt, Juhana
Peltonen, the two LRP reviewers and the special issue editor David King. Rasmus Nykvist provided excellent research
assistance. The Organization for Economic Cooperation and Development (OECD) and the Swedish Research Council (DNR
340-2013-5460) provided generous research funding. The usual caveats apply.
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Robert Demir is a Senior Researcher at Ratio Institute (Sweden) and a Lecturer in StrategicManagement at Lancaster University Management School, United
Kingdom. He is currently studying the emergence of management innovations, the organizing of digitalization, and the practices and processes of open
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