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414 M. Virtanen and T. Heimonen
growth generation is governed by motivation, strategic choices and decision factors.
Their results imply that growing firms are not concentrating on subcontracting or
specialisation but could be diversifying their activities with respect to new markets and
customers and taking advantage of the economies of scale in their production. Growing
businesses were likely to be extrovert in their communication but mainly used their
internal strengths as their competitive edge in the market place.
Smallbone et al. (1995) argued that high growth can be achieved by firms with a
variety of size, sector and age characteristics and one of the most important factors in
achieving growth is the commitment of the leader of the firm. Few high growth firms
were pulled along market trends but in most cases active strategies were necessary to
achieve growth over an extended period. The best performing firms were the most active
in managing their products and markets.
Markman and Gartner (2002) tested whether extraordinary high growth is correlated
with firm profitability. They discovered that growth rate of sales and employment do
not correlate with profitability. Only firm age and industry sector were significantly
correlated to profit growth. They concluded that younger hyper-growth firms tended to be
more profitable than older companies. Orser et al. (2000) studied the link between
managerial capacity and firm growth comparing growing firms with declining firms.
Parallel with the results of Acs et al. (2008) and Markman and Gartner (2002) they found
that growing firms tended to be younger than the firms in the declining category.
Barringer et al. (2005) classified prior literature into four major areas: founder
characteristics, firm attributes, business practices and human resource management. In
order to test the framework, they used cumulative sales growth during a three-year
consecutive period as the measure of growth. From the content analysis, Barringer et al.
(2005) discovered new variables in three categories. The suggested new variables were
entrepreneurial story (narrative) in founder characteristics, customer knowledge in
business practices, and training and employee development in HRM practices.
Chetty and Campbell-Hunt (2003) examined what the relationships are between rapid
international growth and business networks and how networks contribute to success.
From the outcome of the case studies they concluded that business networks offer the
only vehicle for internationalisation when the process is sudden and involves big
increases in capability and specialisation. This implies that the use of external resources
through networking is of the utmost importance for the rapidly internationalising firms.
This outcome is supported by Littunen and Virtanen (2009) who state that a lively
interplay between entrepreneur and external personal networks increases the odds of
becoming a growth business.
The early studies on prediction of initial success and the impact of entrepreneurial
and management experience were performed by Stuart and Abetti (1987, 1990). They
concluded that entrepreneurial experience was one predictor of better performance.
Parallel to their results, Cooper et al. (1994) found greater industry-specific know-how
that could be interpreted as work experience to be typical of successful and growing
firms. Thus, entrepreneurial skills could be measured by using the entrepreneur’s past
work and entrepreneurial experience, the type of vocational training and the age of
indirect variables for skills. Baum et al. (2001) test a comprehensive multilevel model of
venture growth including average annual sales, employment and profit as measures of
growth. Similarly as Littunen and Virtanen (2009) they found that motivation and
competitive strategies were direct predictors of venture growth.