A quantitative content analysis of the characteristics of rapid-growth firms and their founders
Section snippets
Executive summary
A subset of firms that are of particular interest to researchers and practitioners are rapid-growth firms. Rapid-growth firms, which are defined in this study as firms with a 3-year compound annual sales growth rate of 80% or above, provide an important stimulus to the national economy. In addition, rapid growth is frequently an indication of market acceptance and firm success. Young rapid-growth firms, such as Apple Computer, Cisco Systems, and Oracle, have spawned new industries and
Literature review
The literature on rapid-growth firms has focused on whether there are systematic differences between rapid-growth firms and their slow-growth counterparts, and what these differences are. In a review of 55 research articles on firm growth published between 1989 and 1996, Delmar (1997) concluded that there is little agreement on what factors affect growth. In a more recent article, Delmar and Davidsson (1998, p. 399) remarked that despite increased research efforts, our knowledge about
Sample
The data used in this study came from a randomly selected set of narrative case studies provided by the Ewing Marion Kauffman Foundation. The cases represent a subset of a larger database of narratives from entrepreneurs that were regional or national winners of the Ernst & Young LLP Entrepreneur of the Year award sponsored by the National Center for Entrepreneurship Research at the Kauffman Foundation. The Entrepreneur of the Year program recognizes the achievements of U.S. entrepreneurs in 11
Discussion of the results of the content analysis
Table 4 presents the categories and variables that emerged from the study. Throughout the analysis, we were interested in the extent to which the firms in the sample “emphasized” these variables. The frequency of emphasis for each variable, broken down by rapid-growth versus slow-growth firms, is shown in the table. We chose this method of frequency analysis to ensure that “vivid, but false impressions” (Eisenhardt and Schoonhoven, 1990) were not regarded as more meaningful and pervasive than
Summary
Most of the findings reported above affirm the existing literature on rapid-growth firms. The characteristics of the founder of a firm, along with a firm's attributes, business practices, and HRM practices, are important in helping a firm achieve rapid growth. The results of the study are important because they confirm the results obtained through conventional deductive research, which is represented by the majority of the studies cited in Table 1.
Several new concepts emerged from our content
Implications, observations, and conclusion
The results of the paper provide several important implications for entrepreneurs. First, growth is not a random event. A firm's growth-related attributes, its business practices, and its HRM practices make a difference in terms of its ability to achieve and sustain rapid growth. The growth-facilitating variables identified in this study are shown in Table 4. Entrepreneurs who lead growth-minded firms may benefit by studying this table and considering the extent to which their firms embrace the
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