This study investigates how the long-term impact of growth on profitability is moderated by a firm’s strategic orientation and market position.
Firm growth has been central to entrepreneurship research for decades (e.g. Penrose 1959; Birch 1987; Storey 1994; Davidsson, Delmar and Wiklund 2006). Particular attention has often been paid to the fastest growing “gazelle” firms. However, although firm growth may be portrayed as a pathway to profitability, recently more skepticism has emerged (e.g. Davidsson, Steffens and Fitzsimmons 2009). Our literature review show two divergent theoretical perspectives coupled with inconsistent and inconclusive empirical evidence regarding the impact of growth on profitability. In this paper we question – when is too much growth a bad thing? Thus we investigate how the impact of growth on profitability is moderated by strategic orientations and market position for gazelle firms. We hypothesize that growth impacts profitability (H1) and that this impact is moderated by market strategy (H2), source of competitive advantage (H3) and market position (H4).
Senderovitz, Martin; Klyver, Kim; Steffens, Paul; and Evald, Majbritt Rostgaard
"FOUR YEARS ON – ARE THE GAZELLES STILL RUNNING? A LONGITUDINAL STUDY OF FIRM PERFORMANCE AFTER A PERIOD OF RAPID GROWTH (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 32
, Article 14.
Available at: http://digitalknowledge.babson.edu/fer/vol32/iss12/14