This paper explores the relationship between patterns of growth and performance among firms which have grown out of the new small firm pool (i.e. young growing firms). Relatively little attention has been paid in the entrepreneurship literature on the performance implications of different patterns of growth, such as internal (organic) growth versus external growth (acquisition), and related versus unrelated diversification. This is in marked contrast to the huge interest in these issues in the large corporation literature. Is internal or external growth more successful? How closely related should acquired firms be to the acquirers core skills? Do young ventures attempt to retain the small company feel as they grow, by spawning daughter firms? Are there national patterns of early corporate growth? These questions are important for entrepreneurs, for entrepreneurship teachers, and for public policy.
These research questions are explored using a database of 381 young manufacturing ventures in France, Ireland and Scotland collected by the author. These ventures all started de novo between 1973 and 1992, maintained their independence and grew to employ at least 50 people in 1992. The database is effectively a census of all such firms in Ireland, Scotland, and 68 of the 89 departements (counties) of France. Results are compared with an earlier census of young growing firms in Ireland and Scotland, but with 1987 instead of 1992 as the cutoff year.
The results suggest that, contrary to popular belief,
spectacular growth opportunities were to be found in low
technology industries rather than high technology. Acquisition
combined with organic growth was the principal growth mode for
the spectacularly successful entrepreneurial firms. Some
crossnational differences in organizing of growth were
found. These may in part be the unintended effect of
© 1997 Babson College All Rights Reserved
Last Updated 03/05/98