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2 Literature review and conceptual framework conclusion from the cited studies is that older firms seem to grow less rapidly than younger firms generally, and profitable firms are more likely to reach the desirable state of high growth and high profitability than firms starting from a high growth, low profitability configuration. However, in extraordinarily high growth cases the growth rates of sales and employment may not correlate with profitability. Another complication is that the causality in apparent relationships between these variables is not necessarily straightforward or uni-directional; recent studies by Davidsson et al. (2009), Kiviluoto et al. (2011) and Virtanen and Heimonen (2011, article III) indicate that profit seems to generate growth and growth enables future profits. The relationship between sales and employment growth of the rapidly growing small firms that Birch (1979) called “gazelles” has been investigated by several authors. Birch found that they were the most important group of small firms contributing to the creation of new jobs in the economy. Acs et al. (2008) revisited and expanded Birch’s findings and labelled firms that grow rapidly and make major contributions to growth in employment and revenues high impact firms (HIFs). They also found that HIFs represented just 2-3% of firms, and could be either small or large, but accounted for almost all private sector employment and revenue growth in the US economy. Thus, both small and large firms play vital roles in the creation of new jobs. In addition, Acs et al. (2008) found that HIFs tend to be younger than low impact firms, but still to have an average age of around 25 years. It is commonly believed that several factors may have both main and interactive effects on the growth and success of a firm. Therefore, multidimensional frameworks based on statistical modelling have been applied in their analysis. Sandberg and Hofer (1987), who used return on equity as a performance variable, found no confirmation of the effects of the entrepreneur’s characteristics on venture performance. However, they found support for the interactive effects of venture strategy and industry structure. Chrisman et al. (1999) extended the theoretical model of new venture performance proposed by Sandberg and Hofer (1987) by including several additional factors. The extended model incorporated numerous factors that may influence the performance of a firm, encompassing attributes of entrepreneurs, industry structure, business strategy, resources and organisational structure, processes and systems. Several empirical studies have examined effects of various attributes of the entrepreneurs. Notably, Stuart and Abetti (1987) concluded that entrepreneurial experience is a predictor of performance. Cooper et al. (1994) found that both survival and high growth are positively associated 26
27 2 Literature review and conceptual framework with the entrepreneur’s education level, industry-specific know-how and initial financial resources. Smallbone et al. (1995) reported that one of the most important factors for achieving growth is the commitment of the firm’s leader, and more recently Barringer et al. (2005) confirmed that founder characteristics influence the growth of firms. Fabling and Grimes (2007) attempted to identify business practices that set successful firms apart from others. They discovered that both internal and external features of the firms they investigated were associated with business success. Statistically significant variables were investment in upto-date capital equipment, labour-augmenting practices, R&D activities and market research. Littunen and Virtanen (2009) found that most of the factors that differentiated growing ventures from others were dependent on the strategic and operative choices of the entrepreneur. Parker et al. (2010) concluded that in order to become or remain large, firms needed to invest in marketing and have focused product strategies. This confirms results showing that strategy can act as a differentiator of growth firms (Littunen and Virtanen, 2009) and that a focused strategy is important for achieving both high growth and high success (Virtanen and Heimonen, 2011, article III). There is evidence that the use of external resources through networking is of the utmost importance for rapidly internationalising ventures. Indeed, business networks offer the only vehicle for rapid internationalisation involving major increases in capability and specialisation, according to Chetty and Cambell-Hunt (2003), and lively interplay between entrepreneurs and external personal networks increases the odds of their businesses growing, according to Littunen and Virtanen (2009). Complex statistical models have been applied by Wiklund et al. (2009) to evaluate integrative effects of entrepreneurs’ and firms’ characteristics, resources, entrepreneurial orientation and environment on small businesses’ growth. Their two-stage modelling showed that adding direct factors such as attitudes towards growth, environmental dynamism and hostility increased the explanatory power of the model substantially. They concluded that entrepreneurial orientation and growth attitude have strong direct impacts on growth, together with firm age and several environmental factors. They found that resources only have indirect effects on growth, but it could be argued that at least in some cases resources have direct effects on growth (Virtanen and Heimonen, 2011, article III). 2.3.2 Methodological challenges of analysing HGS SMEs Despite the extensive empirical research on growth and success many problems still appear to be linked to identifying and measuring
Page 3 and 4: Aalto University publication series
Page 5: Author Tomi Heimonen Name of the do
Page 9 and 10: Acknowledgements This dissertation
Page 11 and 12: CONTENTS PART 1: Overview of the di
Page 13: List of Articles This thesis is bas
Page 16 and 17: 1 Introduction Some scholars claim
Page 18 and 19: 1 Introduction In addition, the dur
Page 20 and 21: 1 Introduction Figure 1: Framework
Page 22 and 23: 1 Introduction factors that affect
Page 24 and 25: 1 Introduction 1.4 Key concepts and
Page 26 and 27: 2 Literature review and conceptual
Page 46 and 47: 3 Research methodology Constructivi
Page 48 and 49: 3 Research methodology and the meth
Page 50 and 51: 3 Research methodology The data use
Page 52 and 53: 3 Research methodology 3.4 Models a
Page 54 and 55: 3 Research methodology reliable. Se
Page 56 and 57: 3 Research methodology concluded th
Page 58 and 59: 4 Results, evaluation of the studie
Page 70 and 71: References Abetti, P. A. (2001). Ac
Page 72 and 73: References Bhide, A. (2000). The or
Page 74 and 75: References Creswell, J. W. (2003).
Page 76 and 77: References Golafshani, N. (2003). U
Page 78 and 79: References Leitch, C., Hill, F., an
Page 80 and 81: References Pellikka, J. and Laurone
Page 82 and 83: References Storper, M. (1992). The
Page 84 and 85: Appendixes Overview: Appendix 1: Ke
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Appendixes High growth When examini
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Appendixes profitability, liquidity
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Appendixes Appendix 1 Continued (Ke
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Appendixes Appendix 2 Construction
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Appendixes Appendix 2 Continued (Co
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not increased compared to Eastern F
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propensity for risk taking (Covin a
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2. Former studies and derivation of
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firm’s annual sales growth (Arund
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H4. Firm success has an impact on t
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other branches in which employment
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and Rao, 2008). Because of the unev
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Table 1. Characteristics of the dat
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firms from other firms. The data in
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Table 2. Logistic Regression analys
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Public R&D funding was shown to inc
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References Achtenhagen, L., Naldi,
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Kanter, R. (1985), “Supporting in
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Appendix 1. Corporate population ch
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Appendix 3. Distribution of personn
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12 Int. J. Business and Globalisati
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14 T. Heimonen and M. Virtanen we u
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16 T. Heimonen and M. Virtanen suff
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18 T. Heimonen and M. Virtanen Glan
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28 T. Heimonen and M. Virtanen All
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392 Int. J. Entrepreneurial Venturi
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394 J. Siikonen et al. firms’ gro
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396 J. Siikonen et al. generally re
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398 J. Siikonen et al. determinants
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400 J. Siikonen et al. 3.1 National
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402 J. Siikonen et al. 2 the firm
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404 J. Siikonen et al. 4 Results 4.
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410 J. Siikonen et al. activities i
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414 J. Siikonen et al. Delmar, F.,
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416 J. Siikonen et al. Oerlemans, L
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418 J. Siikonen et al. Appendix 1 V
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