Online from: 1994
Subject Area: Enterprise and Innovation
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|Title:||The rapid growth of young firms during various stages of entrepreneurship|
|Author(s):||Hannu Littunen, (Department of Business and Management, University of Kuopio, Kuopio, Finland), Hannu Niittykangas, (School of Business and Economics, University of Jyväskylä, Jyväskylä, Finland)|
|Citation:||Hannu Littunen, Hannu Niittykangas, (2010) "The rapid growth of young firms during various stages of entrepreneurship", Journal of Small Business and Enterprise Development, Vol. 17 Iss: 1, pp.8 - 31|
|Keywords:||Business development, Business environment, Business formation, Entrepreneurialism|
|Article type:||Research paper|
|DOI:||10.1108/14626001011019107 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||The financial support of the Jenni and Antti Wihuri Foundation is gratefully acknowledged.|
Purpose – This paper aims to examine factors influencing the high growth of new firms in metal-based manufacturing and business service firms in Finland. It seeks to compare the factors of how new firms achieve a high rate of growth during the first four years and years five to eight.
Design/methodology/approach – The study reported here is part of a longitudinal research project that has followed the development of 200 SMEs in Finnish metal-based manufacturing and business services since their start-up in 1990. At the seven-year follow-up the present study concentrates on the 86 surviving firms. Logistic regression analysis was used as statistical technique in locating differences between high-growth and other firms and their owner-managers in the selected attributes. This paper focuses on Storey's key elements. In search of potential differences in these characteristics between high-growth firms and other firms, this study compares Finnish firms in relation to founders' motives in starting up on their own account and in their individual background characteristics, changes in strategic factors, changes in networks and management styles during various stages of entrepreneurship.
Findings – The results indicated firstly that there is a clear connection between entrepreneur's know-how and the high growth of firms. Secondly, the findings of this study demonstrate that external networks as a management capability bring about great competitive advantage, innovations and efficiency, especially during the first four years. However, the findings of five to eight years of development contradict the findings of the first four years. The results show that the use of internal networks has a positive effect on firms' high growth during years five to eight years. Finally, the results show that industry sector affected high growth, especially in specialised metal industry firms, both during the first four years and after five to eight years of development.
Research limitations/implications – The implications of this study for academics, educational institutions, entrepreneurs, and other practitioners are that the so-called support services of internationalisation and growth for new firms are most important. These support services could be developed with public sector assistance in areas such as financing research, innovation and information technology projects.
Orginiality/value – The paper provides a framework for testing the factors that differentiate growing new ventures during various stages of entrepreneurship.
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