Why companies succeed or fail: corporate cycles and firm function in tandem

This paper aims to underscore the need for developing a model of corporate cycles, which can explain how corporations rise, decline and fall in the marketplace.

This is a conceptual study that draws on prior theoretical and empirical insights of the entrepreneurial, managerial and social functions of the firm to develop a model of corporate cycles.

Firms that pass the test of the market and live for a long time, undergo cycles, expansions and contractions, driven by successes and failures in the way they configure and execute their entrepreneurial, managerial and social, functions.

A model of corporate cycles can explain how momentum rises and falls on Wall Street. It can also help predict revenue growth, a key variable in equity valuation models.

The originality of this study stems from a constructive synthesis of different concepts and theories of the firm to explain firms’ growth, decline and fall in the marketplace.