Frontiers of Entrepreneurship Research
1996 Edition


WHEN DOES GROWTH PAY?

Richard N. Cardozo, University of Minnesota

Tait Elder, University of Minnesota

Brian Harmon, University of Minnesota


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Introduction
Method
Description of the Sample
Results and Discussion
Conclusion
References
Exhibits


ABSTRACT

A correlation of 0.45 was found between sales growth and net worth increase in a convenience sample of 118 startup firms analyzed over a seven year period. Of the 73 firms showing an overall increase in sales, 55 had an increase in net worth. Of the 15 firms showing a decrease in sales, 7 showed an increase in net worth; and net worth increased in 10 of the 30 firms showing no sales increase. If control of costs produced maximum profits from available sales, as predicted by microeconomic theory, this phenomenon appeared as many as small changes rather than as major increases or reductions.

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1997 Babson College All Rights Reserved
Last Updated 1/15/97 by Geoff Goldman & Dennis Valencia

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