In both the academic literature and popular media, firm growth – especially high growth - is considered a sign of entrepreneurial success. While the existing literature considers firm growth a desirable goal research results on the relationship between growth and profitability is inconclusive. This desirability of growth for young ventures is challenged by Davidsson et al (2008). Their study shows that a high profitability- low growth firm is more likely to make the transition to high profitability – high growth than a firm that starts off with low profitability. Our study expands on the work of Davidsson et al. (2008). Our study is limited to a narrow empirical context – life science ventures in Finland.
Brännback, Malin; Östermark, Ralf; Carsrud, Alan R.; Renko, Maija; and Aaltonen, Jaana
"IS IT A LEMON OR A CHERRY? MARKOV MODELING OF ENTREPRENEURIAL GROWTH AND PROFITABILITY (INTERACTIVE PAPER),"
Frontiers of Entrepreneurship Research: Vol. 29
, Article 7.
Available at: http://digitalknowledge.babson.edu/fer/vol29/iss1/7