Dynamic Management of Growing Firms–Part 4

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This is the 4th and final part of the article on Dynamic Management of Growing Firms.

Market strategy and Sales Growth


In this section, we cover a wide variety of variables that may be viewed as aspects of market strategy, including the planning process itself and the types of strategies chosen. In particular, we cover the following variables: Formal strategic planning, market positioning and market research, product innovation strategy, breadth of strategy, customer relations and sales tactics, as well as a few  related industry characteristics including industry growth and market demand. We include industry variables along with other market strategy variables because in our view, the industry selection process is not random. CEOs consider the type and characteristics of industry both at start-up and at later points as a company diversifies or reorients its strategy.

Formal Strategic Planning. Strategic management authors urge use of the business plan. In fact, the business plan forms the cornerstone of most introductory entrepreneurship courses. And yet very few companies in randomly-drawn samples of small businesses actually do formal planning. Indeed, only five percent of CEOs in our own study claim to plan formally. One informal indicator of its value is the much higher incidence of its use reported among Inc. 500 companies with about 50% reportedly having prepared a business plan at start-up.36

Research evidence suggests that formal business planning may be valuable, but only if it is approached with sufficient understanding and motivation. Keats and Monanari suggest that successfully integrating strategic planning into normal operations is a function of cognitive development.37

The planners’ backgrounds, the intensity of planning, and the type of strategy may all change the relationship between formal strategic planning and sales growth. Admittedly based on fairly limited research, we may tentatively conclude that:

  • Companies using  professionals to develop a formal business plan grow faster than those who do not.38
  • Formal planning may also require a certain type of CEO, either with more formal management training and experience, or more openness to new information.  For instance, one study finds that formal planning spurs sales growth, but only in companies led by  CEOs fitting the “opportunistic” profile—well educated, flexible, confident, and with an awareness and orientation toward the future. For those with the opposite profile (“craftsman”), researchers find no relationship between formal planning and sales growth.39
  • The quality of business planning matters: The more intense the formal planning –that is, the more time and effort spent, and the more functions considered, the faster a company appears to grow.40
  • The usefulness of formal planning may depend upon the type of strategy —innovative vs. duplicative or “copycat.”. In one study, though neither formal planning nor type of strategy (i.e. product innovation vs. a duplicative “copycat” strategy) predict sales growth alone, interaction effects are statistically significant. In particular, Olson and Bokor find that the fastest growing companies use both an innovative strategy and formal planning. They grow faster than innovative companies using an informal approach, and also faster than “copycat” companies regardless of planning approach. Yet the study raises an interesting caveat: Among copycat companies, those using informal planning grow faster than those using a formal approach.41
  • The importance of strategic planning may depend on size: In a sample of  poststart-up mid-sized firms, systematic strategic planning was found to be a factor in continued growth, although conclusions are drawn from case analysis only.42

Market Positioning and Market Research. Market positioning is an important part of strategy.  Seeking new markets for products is important to maintain growth over time:

  • One major study of more mature, small companies finds that  developing new markets for existing products in existing industries boosts sales more than does the design of new products.43
  • In another article,  larger private firms that continue to grow must find ways to extend the market, adding adjacent market niches.44
  • To develop a more effective marketing plan, it is important  to learn more about the customer and marketplace. In one study, businesses grow faster where the company views marketing as an important strategy, the company conducts market research and someone in management has a particular expertise in marketing at start-up.45 In particular, from a rather comprehensive list of company, owner-founder, and strategy characteristics,  “conducting market research,” is the single, strongest predictor of sales growth, explaining 14% of the variance in a large sample of small manufacturing firms in Great Britain.46
  • Geographic positioning, especially when exporting, has also been linked with faster growth for certain subsamples, including larger, more established firms, and firms in particular regions whose local markets are seriously constrained, as in Northern Ireland.47

Product Innovation. Product innovation is a topic that can cut across at least two DSP issues: market strategy and technical mastery. In particular, the decision to offer new and different products vs. duplication of  products can be viewed as market strategy. But how well a company is able to innovate (e.g. number of patents) might be viewed as an aspect of technical mastery. We try to include only the former orientation in this section. Comparison of results is especially difficult in this area because terminology varies widely from study to study. For some, innovation relates to product development truly new to the world.  For others, it may include product, or even process improvements. Also, as with formal planning, we cannot look at innovation in isolation.  The type of planning as well as external environmental characteristics may interact with the innovation variable in predicting sales growth. We draw the following tentative conclusions from existing research.

  • The impact of innovation on sales growth may depend on formal planning as well as level of management experience. Olson and Bokor’s study, previously mentioned in the formal planning discussion, is also of relevance here. Their study finds no significant main effect between product innovation and sales growth.  But for companies carrying out formal business planning,  innovation and sales growth are significantly linked although the sample size is very small. Further, the nature of management experience also appears to play an important role in determining the impact of innovation on sales growth—innovation boosts sales growth in companies led by experienced managers but not necessarily in companies led by inexperienced managers.48
  • In a much larger sample of companies, a different pair of researchers, Acs and Audretsch, do indeed find a linkage between innovation and sales growth, but only at a different level of analysis, and taking a time delay into account.  Grouping small-to-medium-sized manufacturing companies (those with less than 500 employees)  by industry, they find that small companies in innovative industries grow faster than those in less innovative industries, but this effect is delayed by four years. Furthermore, sales growth is also greater for small companies in industries where smaller companies disproportionately contribute new innovations to an industry.49

A growing stream of entrepreneurship research uses a subjective rating for financial performance combining profitability, market share and sales growth together into one rating is used as a measure of firm performance. Though not directly comparable to research on sales growth alone, we include it here because it  partially represents the dependent variable, sales growth, and is becoming a generally accepted measure for overall firm performance.50 Using this approach:

  • Covin, Slevin, and Schultz find that a high orientation toward product innovation and risk-taking (referred to as strategic posture) is associated with better firm performance for companies aiming to increase sales and market share (a “build” mission) but is unrelated in companies aiming to maximize profitability and cash flow in the short term (referred to as a “harvest mission”).51

Broad vs. Narrow Strategy (Diversification).  At start-up, entrepreneurs are often urged to focus on a narrow niche.  But based on research to date, a narrow strategy is not always advisable.  In our own research, we find no link between  breadth with sales growth, but with respect to profitability, we do find that smaller companies (fewer than 80 employees) suffer but companies with more than 80 employees benefit from a more diversified approach.  Other researchers confirm the importance of company size in altering the relationship between strategic breadth and firm performance:

  • In two separate studies of fairly small firms—(one with less than 50 employees; the other not stated)— firms focusing on a single product or narrow product line grow more quickly than more diversified companies.52
  • But for older and/or larger firms,  just the opposite occurs. Those who diversify or plan to diversify grow faster.53

Industry growth rate is another factor that may alter the relationship between diversification and sales growth:

  • Focus appears to boost sales growth in a highly competitive, low growth, mature industry.  But for companies in higher growth industries, a broader strategy appears to bolster sales growth—even for start-ups.  It is not clear however whether such a strategy is as beneficial for profits. In the same study, start-up firms in the high growth industry following a broader strategy achieved only moderate return on sales, at least  for the short term.54

Industry Growth. Industry growth has also been looked at as an independent variable.  The limited work in this area provides mixed results:

  • One applied economics study, aggregating firms by similar industry, finds no relationship between industry growth and the rate of growth for all small firms under 500 employees.55
  • In another study, smaller, start-up companies do not grow any faster in rapidly growing industries.  But in a different sample examined by the same research team, larger, older companies in more rapidly growing industries do grow faster.56 Given these results, we need to consider the possible moderating effects of company size or age.
  • And based on a different study, data suggests that being a pioneer, that is, being in a rapid-growth industry,  may not pay off in retaining higher market share or in a lingering cost advantage either.57

Market demand. Market demand is another variable linked to sales growth.

  • In a  study of small manufacturing firms, (fewer than fifty employees),  CEOs were asked about a number of constraints on company growth. The perceived lack of demand for the main products and/or a declining market was the single most important constraints, predicting 10% of the variation in sales growth.58

Customer Relations and Sales Growth.  Finally, some studies look at the quality of customer contacts and the sales staffing used to achieve sales. Sales growth is greater where:

  • close customer contact is made.59
  • The use of external sales agents (e.g manufacturers’ representatives), are not relied upon to market goods.60

Conclusions Related to Market Strategy and Sales Growth.  Research in this section confirms the importance of market strategy as a predictor of sales growth.  Results also suggest that rather than one streamlined answer, the appropriate market strategy is likely to change as a company grows, especially if that growth begins to saturate market demand.  Successful companies are keenly tuned into market research, positioning themselves in new markets as needed over time. Although product innovation can be useful, other approaches can substitute as long as the company maintains sufficient demand for their product (either by seeking out new markets, or making improvements to existing products).  Market demand, though crudely measured in Barkham’s research in Great Britain, may provide the key to understanding the interactive effects of company size and industry growth. While a narrowly focused strategy may help a start-up, it may hamper long-term growth unless the company is able to adapt to new markets or products as it grows out of its niche.  Yet there may be less of a need to diversify for companies in growing markets, as long as demand within the existing market niche continues to outpace the company’s ability to meet that demand.

Resource Acquisition and Sales Growth

Compared with market strategy, only a handful of studies empirically test the contributions of capital, information and human resource acquisition strategies to sales growth in small-to-medium-sized firms. Those studies support our conclusions that sales growth is associated with the ability to obtain capital and personnel. One study also sheds light on types of external information associated with growth. Companies are likely to grow faster where:

  • They have  good relations with banks or other established funding relationships;61 and they have outside investors and/or are willing to share equity among two more individuals.62
  • They have stronger personnel recruitment procedures and are able to recruit nonowning managers;63 and
  • They are able to obtain needed external information, especially in the areas of business strategy, personnel and recruitment, public relations and advertising.64

Resource Allocation and Sales Growth

Few  resource allocation variables in our own study directly affect sales growth, though several impact profits. In our study, among a variety of financial indicators tracked, only the CEO’s  reported tendency to track sales progress over time predicts more rapid sales growth. In addition, we find a strong linkage between sales growth and the adequacy of cash flow, though the latter lags in time, suggesting that sales growth provides better cash flow, rather than the reverse. Other research identifies the following two predictors of sales growth:

  • Using investment in machines to improve the production process is linked with faster growth;65 and
  • Also, among start-up firms, (but not among larger, older firms) those operating on a leaner basis (fewer managers, physical assets, lower compensation/employee) grow more quickly.66

Work Flow and Sales Growth

Our own research shows that sales growth is related to several aspects of work flow, including effective work-division strategies, effective role assignments, effective coordination strategies and more widely shared information.67 Only a few studies in the fields of entrepreneurship and strategy include aspects of work flow and organization design as factors predicting sales growth. Researchers have found that faster sales growth is associated with:

  • delegation of authority or other organizational changes that give senior management more time;68
  • the presence of a functionally balanced management; and69
  • the presence of work standards and also the presence of monitoring systems.70

In the discussion of research on market strategy and sales growth, we mentioned the use of a subjective measure of financial performance.71 Although this  measure only partially reflects sales growth,  we include research predicting this measure, because, to date, other than our own work,  it represents the bulk of research on work flow and entrepreneurial financial performance. Specifically, work by Covin, Slevin and colleagues draws the following conclusions:

  • An organic organization structure is associated with higher firm performance in firms with a build mission but not a harvest mission, as defined previously.72
  • In a separate study, Covin and Slevin find that organically-structured/entrepreneurially managed firms and mechanistically-structured/ conservatively managed firms performed more highly than firms otherwise matched on organization design and management style. Entrepreneurial management style is a term for a rather broad class of measures, basically emphasizing product innovation, breadth of strategy,  active search for big new opportunities and a charismatic leadership; the conservative style is just the opposite.73

Although we find the broadly-defined, multi-dimensional approach to definition of variables in this research stream to be somewhat confusing, it presents an exciting research direction.

Changes in work flow are a common theme in life stage models.74 Such studies support the dynamic changes of work flow strategies over time—more formal control and feedback systems, coupled with greater delegation of authority.  Unfortunately, such studies fail to correlate such changes with sales growth, examining instead at which stages such changes might take place. Nevertheless, such evidence clearly points to the important organizational changes companies experience as they grow. Those results, the results from our study, and the promising work of Covin, Slevin, and their colleagues, suggests that far more research is warranted in the area of work flow and sales growth, than has been done to date. Furthermore, contingency theories may be extremely important to aid in understanding of ideal structures.

Human Relations and Sales Growth

In our study, effective communication of values and employee goal integration are predictors of faster growth. Other researchers emphasize the importance of  human relations and effective human resource management in rapidly growing firms.75 Yet in spite of the overall wealth of research in organization behavior, most of the research predicts satisfaction, absenteeism, turnover and other organizational variables.  In short, the body of literature statistically testing relationships between human relations concepts and sales growth is extremely limited. Clearly more work is needed in this area.


Public Relations and Sales Growth

Our research data covered public relations in a fairly limited manner for the project reported in this book. We did identify a strong linkage between community image and sales growth  Little empirical examination of this important variable appears to have been done by others either. However, Dyer provides an excellent discussion of the public relations concept and how it differs from marketing.76 Dyer supports our view that public relations may provide yet another source of competitive advantage, although he presents no empirical data.

An emerging research area, environmental entrepreneurship, may spur more research in one aspect of public relations: ecological interests inside and outside the government. As one aspect of public relations, a company’s impact on the physical environment may stimulate support or contempt from the public, and generate fines or tax benefits from government, depending upon its actions. One study finds a link between voluntary emission reduction and firm performance.77 A company’s environmental stance may influence other aspects of strategy as well. For instance, Ferrone suggests that environmentally-conscious product design strategy may serve as a competitive advantage.78 But  few studies to date have actually tested links between environmental policy and sales growth.  Part of the problem in testing this hypothesis is that although companies face considerable environmental pressure, only a small minority have responded by changing their business strategy focus.79 A recent article provides a more detailed discussion of the application of the DSP model to environmental entrepreneurship, with illustrative cases. 80

Technical Mastery and Sales Growth

In our study, faster sales growth is linked with better technical skills and quality of output. In addition, better technical skills, quality of output and productivity are all linked with steadier growth.  A few other studies examine related aspects of technical mastery. Although we do not touch on new product development in our original project, it is an essential component of the technical mastery strategy and is included in our treatment of  technical mastery in subsequent writings.81 Studies we reviewed suggest that technology and product improvements may boost sales, depending on the circumstances:

  • Age and or size may influence the impact of technology on sales growth: In one study, young, start-up companies grow faster with new, more advanced technology. However, the same effect was not found for older, larger firms.82
  • Studies on innovation need to separate truly new product invention from improvements to existing products: In a different study of small firms (less than 50 employees), companies installing new machinery in a quest for improved process also tend to grow more quickly.83 In the same sample of small manufacturing firms (all with less than 50 employees) improvement of existing products boosts sales more effectively than the creation of truly novel products.84
  • Innovation may be a stronger requirement in high-technology rather than in low-technology industries. In one study of companies in the biotechnology industry, pioneering use of applied R and D, and internal sources of innovation are associated with greater sales growth.85
  • And once again, we include results from Covin and Slevin’s group even though they predict a hybrid dependent variable, only partially reflecting sales growth. In particular, they find an interactive effect of the environment: Refinement of existing products and services is more likely to boost financial performance, including sales growth,  in low-risk, (benign) environments but not in high-risk (hostile) environments.86
  • In another study by their research team, Covin, Slevin and Schultz find that companies with a harvest-oriented strategic mission perform better when they emphasize research and development activity geared toward the development and refinement of existing products, but that such emphasis has no effect on performance for build-oriented firms.87 Furthermore, neither new product development nor product refinement are correlated with  firm performance in that study.

Whereas our original research project limits itself to potential outcomes of a well-executed technical mastery strategy, Zahra has developed an extensive research program to identify potential technical mastery strategies, including pioneering (a company’s commitment to developing and introducing radical technologies), product portfolio breadth, process portfolio breadth (the commitment to applied research in developing manufacturing process technologies), commitment to internal R and D,  use of external technology and forecasting.88 These strategies are correlated with return on assets. Zahra then develops a  contingent set of recommended technology strategies based on the degree to which environments are dynamic, hostile or heterogeneous.  Although Zahra predicts return on sales, rather than sales growth, the depth of development of the conceptual approach to technology strategy should spur more research in this area.




Summary of Research on Sales Growth

The growing number of research studies and improved quality of research are quite encouraging. No field of knowledge can build effectively without the concerted efforts of many researchers examining the same issues. Published research to date has been dominated by the marketing field. However, several researchers have broadened their perspective to look at other organizational strategies and sales growth, in the process identifying additional variables which may serve to provide better prediction of sales growth in the future.

Contingency or interactive effects, long hypothesized to be of importance in organization effectiveness and design, are beginning to be examined in a systematic way in the entrepreneurship and strategic management literature. Some internal issues within the firm interplay with one another—firms pioneering new technologies and products may need to approach planning and organization design differently than less innovative companies. Size and age may also create potentially important interactions as does the skill level and experience of top management. And companies set up the same way may succeed or fail, depending, further on the nature of the environment.   Size is a very important determinant but past research has often failed to distinguish clearly enough between the effects of size or age, and the direction of causality. Since companies growing rapidly are also getting bigger in size, we need studies that more carefully control for these two effects. For instance, does formal business planning really stimulate growth, or is it a correlate that emerges as a company increases in size? The predictors are far from simple, yet certain clarifying patterns are appearing. One thing is clear: More research is needed, especially quantitative, multivariate research that examines the interrelationships of these different factors.

Concluding Remarks


In this introduction, we have attempted to provide a firm basis of understanding for the material we present in the rest of this book.  In particular, we emphasize the following points:

  • Certain strategic actions determine continued growth and profitability in the small-to-medium-sized firm.
  • The fields of  strategic management and organization theory have each begun to take advantage of ideas from the other discipline.
  • We schematically present the Dynamic System Planning (DSP) Model, derived from three key assumptions: That organizations are a person’s ultimate tool; that surviving and growing companies must combat entropy with an effective input-transformation-output cycle; and that organizations must be viewed as dynamic entities in the context of a network of larger social systems.  These three assumptions define the key management strategy issues of the DSP model: Resource acquisition, resource allocation, work flow, human relations, technical mastery, market strategy, and public relations. The first six help to combat entropy. The seventh assures that the organization relates appropriately to a large network of other social systems outside the organization. These seven issues are guided by the founder’s or current leader’s company vision.
  • The DSP model can be helpful in viewing organizations more cross-functionally.
  • The DSP model can be used for quick feedback in strategy development. It can also be used in all three phases of more conventional strategic planning: To identify current and potential strengths, weaknesses, core competencies, strategies, and competitive advantage; to develop alternative strategies; and to develop an implementation plan.
  • Finally, we update interested readers on research in strategy and sales growth of small-to-medium-sized firms. Although we are already able to draw practical implications, research on strategy and sales growth is in its infancy. However, we share what we view to be the most validated, and promising findings.

We attempt to superimpose the DSP model as an organizing theory to review findings on strategy and growth, many findings otherwise being scattered and appearing unrelated. We find a recurring theme in our literature review: Predictors of sales growth may change as the company grows and/or its environment alters. Some findings, taken together, suggest perhaps that new, small companies can squeeze into a market niche more easily if their founders are determined enough. But as a company grows, it becomes more essential that the CEO understand of the many complex requirements imposed by a company’s environment and in turn, alter the way the firm is managed. Our understanding of these dynamics are still in their infancy, frequently hampered by the primitive statistical and data techniques we have available to us to understand complex, multidimensional, and dynamic processes. Hopefully what we learn over the next few decades will guide us toward more effective, dynamic management of  the growing firm.

References and Footnotes-Part 4:

36.   Jeffrey C. Shuman, John J. Shaw and Gerald Sussman, “Strategic Planning in Smaller, Rapid Growth Companies,” Long Range Planning, 18 (1985), pp. 48-53. Also see Jeffrey C. Shuman and John A. Seeger, “The Theory and Practice of Strategic Management in Smaller Rapid Growth Firms, American Journal of Small Business, 10 (1986), pp. 7-18.

37.     B. W. Keats and J. R. Montanari, “Stages of Strategic Sophistication: A Developmental Model,” Paper presented at Decision Sciences Institute National Meetings, Honolulu, 1986 and cited in Jeffrey S. Bracker, Barbara W. Keats, and John N. Pearson, “Planning and Financial Performance among Small Firms in a Growth Industry,” Strategic Management Journal, 9 (1988),  pp. 591-603.

38.     See Richard B. Robinson, “The Importance of  ‘Outsiders’ in Small Firm Strategic Planning,” Academy of Management Journal, 25 (1982), pp. 80-93.  Also see Richard B. Robinson, Jon A. Pearce, George S. Vozikis, and Timothy S. Mescon, “The Relationship Between Stage of Development and Small Firm Planning and Performance,” Journal of Small Business Management, 22 (1984), pp. 45-52.

39.     For research on moderator effects of opportunistic vs. craftsman profiles, see Bracker, et al, “Planning and Financial Performance.”  Though not statistically tested, Olson and Bokor’s work suggests a trend that formal business planning appears to spur sales growth to a greater extent for more experienced managers.  See Philip Olson and Donald W. Bokor, “Strategy Process-Content Interaction: Effects on Growth Performance in Small, Start-up Firms,” Journal of Small Business Management, 33 (1995), pp. 35-44. Finally, while not specifically measuring management characteristics, Robinson suggests that there may be a possibility that those busienss owners choosing to work with the SBDC may have a greater openness to new ideas or greater commitment to economic success, consistent with certain elements of the opportunistic profile. See Robinson, “The Importance of  ‘Outsiders,” p. 91.

40.     Robinson, et al, “The Relationship Between Stage of Development and Small Firm Planning and Performance,”  pp. 45-52. Duchesneau and Gartner also find a link between independent variables, time in planning, using professional advice, and planning breadth and dependent variable, profitability.  (See Donald A. Duchesneau and William B. Gartner, “A Profile  of  a New Venture Success and Failure in an Emerging Industry,” in Frontiers of Entrepreneurship Research, eds. Bruce A. Kirchhoff  et al (Wellesley, MA: Babson College, 1988), pp. 372-86.

41.     Olson and Bokor, “Strategy Process-Content Interaction,” p. 39-40.

42.     See Richard L. Osborne, “Second Phase Entrepreneurship: Breaking Through the Growth Wall,” Business Horizons, 73 (1994) pp. 80-6.

43.     This was an unpublished study by David Smallbone, David North and Roger Leigh, “Managing Change for Growth and Survival: The Study of Mature Manufacturing Firms in London during the 1980s,” Working Paper No 3,(Cambridge Planning Research Centre, Middelsex Polytechnic, 1992) conclusions of which are described in Storey, Understanding the Small Business Sector, p. 157.

44.     Osborne, “Second Phase Entrepreneurship,” p. 81. Once again, note that this study is nonempirical, based on case study.

45. Barkham, et al, The Determinants of Small Firm Growth, p. 37.

46. Ibid.

47. See Smallbone, et al in Storey, Understanding the Small Business Sector, p. 157. Storey also refers to another study by Kinsella . See R.P. Kinsella et al, Fast Growth  Firms and Selectivity (Dublin: Irish Management Institute, 1993..

48. Olson and Bokor, “Strategy Process-Content Interaction,” p.42. We drew this conclusion by combining raw data presented in Tables 5 and 6 but a statistical test was not performed.

49. Acs and Audretsch, “The Determinants of Small Firm Growth.”

50. See A. K. Gupta and V. Govindarajan, “Business Unit Strategy, Managerial Characteristics, and Business Unit Effectiveness at Strategy Implementation,” Academy of Management Journal, 27 (1984), pp. 25-41.

51. Jeffrey G. Covin, Dennis P. Slevin and Randall L. Schultz, “Implementing Strategic Missions: Effective Strategic, Structural and Tactical Choices,” Journal of Management Studies, 31, no. 4 (1994), pp. 481-505.

52. Barkham, et al, The Determinants of Small Firm Growth, p. 38; Also see Robin Siegel, Eric Siegel, and Ian C. MacMillan, “Characteristics Distinguishing High-Growth Ventures,” Journal of Business Venturing, 8 (1993), pp. 169-80. See page 173.

53. Siegel, Siegel and MacMillan, “Characteristics Distinguishing High-Growth Ventures,” p. 175.  See also Smallbone, et al in Storey, Understanding the Small Business Sector, p. 157.

54. McDougall, et al, “The Effects of Industry Growth and Strategic Breadth”, pp. 537-54.

55. Acs and Audretsch, “The Determinants of Small Firm Growth,” p. 150.

56. Siegel, Siegel and MacMillan, “Characteristics Distinguishing High-Growth Ventures,” p. 174.

57. D. A. Aaker and G.S. Day, “The Perils of High Growth Markets,” Strategic Management Journal, 7 (1986), pp. 409-421.

58. Barkham, et al, The Determinants of Small Firm Growth, p. 40.

59. Siegel, Siegel and MacMillan, “Characteristics Distinguishing High-Growth Ventures,” p. 175.

60. Barkham, et al, The Determinants of Small Firm Growth, p. 82-83.

61. Siegel, Siegel and MacMillan, “Characteristics Distinguishing High-Growth Ventures,” p. 175-176.

62. Four studies support the relationship between external equity and sales growth, reviewed by Storey, Understanding the Small Business Sector, p.146.

63. P. Wynarczyk, R. Watson, D.J. Storey, H. Short and K. Keasey, The Managerial Labor Market in Small and Medium Sized Enterprises (London: Routledge, 1993) cited in  Storey, Understanding the Small Business Sector, p.150, p.311.

64. See Smallbone, et al in Storey, Understanding the Small Business Sector, p. 157.

65. Barkham, et al, The Determinants of Small Firm Growth, p.140.

66. Siegel, Siegel and MacMillan, “Characteristics Distinguishing High-Growth Ventures,” p. 174.

67. Lorraine Uhlaner Hendrickson, “Size, growth or uncertainty: What matters in design of the firm?” Proceedings of 1990 International Council for Small Business Conference, Washington, D.C., June 7-10, 1990.

68. See Smallbone, et al in Storey, Understanding the Small Business Sector, p. 157.

69. Siegel, Siegel and MacMillan, “Characteristics Distinguishing High-Growth Ventures,” p. 175.

70. Hendrickson, “Size, growth or uncertainty.”

71. Covin, Covin, and Schultz, “Implementing Strategic Missions,” pp. 481-505.

72. Ibid.

73. Jeffrey G. Covin and Dennis P. Slevin, “The Influence of Organization Structure on the Utility of an Entrepreneurial Top Management Style,” Journal of Management Studies,  25, no. 3 (1988), pp. 217-234.

74. For the classic article, see L.E. Greiner, “Evolution and Revolution as Organizations Grow,” Harvard Business Review, 50 (1972), pp. 37-46. For just a few of the other articles discussing this topic, see Charles W. Hofer and Ram Charan, “The Transition to Professional Management: Mission Impossible?” American Journal of Small Business, 9, no. 1 (Summer, 1984), pp. 1-11; Eric Flamholtz and Yvonne Randle, “How to Avoid Choking on Growth,” Management Review, (May, 1987), pp. 25-9; Steven H. Hanks and Gaylen N. Chandler, “Patterns of Functional Specialization in Emerging High Tech,” Journal of Small Business Management, 32, No. 2 (1994), pp. 23;  R.K. Kazanjian and R. Drazin, “A Stage-Contingent Model of Design and Growth for Technology Based Ventures,” Journal of Business Venturing, 5, (1990), pp. 137-50.

75. John Kotter and Vijay Sathe, “Problems of Human Resource Management in Rapidly Growing Companies,” California Management Review,  21 (1978), pp. 29-36.

76. Samuel Dyer, “Public Relations Strategies.”

77. S. L. Hart and G. Ahuja, “Does it Pay to be Green? An Empirical Examination of the Relationship between Emission Reduction and Firm Performance,” Business Strategy and the Environment, 5,  no. 1 (1996), pp. 30.

78. R. Ferrone, “Environmental Business Management Practices for a New Age,” Total Quality Environmental Management, 5, no. 4 (1996) pp. 41-6.

79. B. Garrod and P. Chadwick, “Environmental Management and Business Strategy: Towards a New Strategic Paradigm,” Futures, 28, no. 1 (1996), p. 37.

80. Hendrickson and Tuttle, “Dynamic management of the environmental enterprise.”

81. Hendrickson and L’abbe Wu, “Technical Mastery: Basis for Strategic Manufacturing Management,” p.205.

82. Siegel, Siegel and MacMillan, “Characteristics Distinguishing High-Growth Ventures,” p. 178.

83. Barkham, et al, The Determinants of Small Firm Growth, p.88.

84. Ibid, p. 84.

85. Shaker A. Zahra, “Technology Strategy and New Venture Performance: A Study of Corporate-Sponsored and Independent Biotechnology Ventures,” Journal of Business Venturing, 11 (1996) pp. 289-321.

86. Covin, and Slevin, “Strategic Management of Small Firms in Hostile and Benign Environments.”

87. Covin, Slevin and Schultz, “Implementing Strategic Missions,” p.481.

88. Shaker A. Zahra, “Technology Strategy and Financial Performance: Examining the Moderating Role of the Firm’s Competitive Environment,” Journal of Business Venturing, 11,  (1996), pp. 189-219.

The research:

The research was conducted by Dr. Lorraine Uhlaner with guidance from Dr. John Psarouthakis in the College of Business, Eastern Michigan University. An outcome of the research was the book “Dynamic Management of Growing Firms”, by Lorraine (Hendrickson) Uhlaner and John Psarouthakis, published by the University of Michigan Press in 1998. Upon reviewing recent literature, John Psarouthakis, given his experience in entrepreneurial management on how such companies are managed he thought it useful also to make the research results and analysis available through this magazine after we concluded that the management model described is still valid.

Lorraine Uhlaner is Professor of Entrepreneurship at EDHEC Business School, France and
Visiting Professor of Entrepreneurship at Nyenrode Business University, The Netherlands
She was a member of the faculty at the College of Business, EMU prior to her engagements  above.
An academic researcher and teacher. In research, Prof. Uhlaner currently focuses on ownership and governance issues in the privately-held firm, especially responsibilities of ownership in firms with multiple ownership. Extensive research on SMEs as well as larger family-owned firms.
Extensive teaching experience in entrepreneurship, family business and organization behavior. She specializes in Family governance, responsibilities of ownership, knowledge management and structure in SMEs, Business transfer in the privately held firm.

Prof. Uhlaner received her PhD in Organization Psychology from the University of Michigan.
Her prior studies were at Harvard University, and at the University of Leiden, The Netherlands.







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