Abstract

Theory development on firm growth has been notably slow (Lockett et al., 2011). We suggest that this is in part due to an overemphasis on internal firm resources. Indeed, the resource-based view was initiated as a framework to analyze the internal strengths and weaknesses of a firm (Barney, 1991). This is problematic as new firms are increasingly employing strategies that focus on accessing and leveraging external resources without actually owning them (Dyer & Singh, 1998; Singh & Mitchell, 2005).

In this paper, we introduce the concept of organizational boundary permeability to the study of new firm growth. Boundary permeability refers to the degree to which firms access resources outside of firm boundaries. Establishing the level of organizational boundary permeability is particularly salient in the formation of new ventures. Overly permeable boundaries can lead to dependence on other powerful organizations (Pfeffer & Salancik, 1978), while isolationist strategies may prevent a firm from accessing critical resources needed to overcome liabilities of newness (Stinchcombe, 1965). We examine how new ventures design organizational boundaries to leverage internal and external resources for achieving growth during their first years of existence.

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