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Pickett
From a macro-perspective, Bueler (1993) argues that a sustainable society must meet certain
“...ecological and political requirements” (p. 322) and also sees our current growth model in the
United States, i.e., perpetual growth, as being replaced by one of sustainable growth. The
differentiation between “perpetual” and “sustainable” is explained as “... [perpetual] growth...is
seen as essential to the solution of our economic problems” (p.322), whereas sustainable growth
“stresses limits and equality” (p. 334). In other words, the former identifying a limitless potential
and the later describing and organization’s boundaries encountered through the environment or
competition.
Matsuyama (1999) argues that there are two views of growth, “...one based on factor
accumulation and the other on innovation” (p. 335). The factor accumulation model is referred to
as neoclassical whereas the innovation model is referred to as the neo-Schumpetarian model.
Interestingly enough, Matsuyama’s research found the following:
It is shown, under an empirically plausible condition that the balanced growth
path is unstable and the economy achieves sustainable growth through cycles,
perpetually moving back and forth between two phases. In one phase, when
output and investment grow faster, there is no innovation and the market
structure is competitive, as in the neoclassical model. In the other phase, when
growth rates of output and investment are lower, innovation takes place, and the
market structure is more monopolistic, as in the neo-Schumpetarian model.
(p.335)
Essentially, Matsuyama (1999) found the overall “...economy grows faster along the
cycles than along the (unstable) balanced growth path, [and] both investment and innovation is
essential in sustaining growth indefinitely” (p. 335).
From a different perspective, Eicher and Turnovsky (1999) researched scaled and nonscaled
growth models and found that long-run “...scaled growth rate is responsive to the
economy” (p. 413), whereas, non-scaled growth is obtained depending on three separate
conditions (p. 413):
1. No restriction on production function, but requires constant returns to scale on all
factors
2. When two sectors grow at differential constant rates and,
3. Where two production functions are separable and homogeneous
In other words, much like industry indicators have implications for determining a
company’s level of financial distress (Whitaker, 1999); overall growth of a specific market or
sector has an effect of non-scale growth whereas the overall economy has the determining factual
effect on scaled growth for a particular company.
Van Horne (1998) has defined sustainable growth rate (SGR) as “...the maximum annual
percentage increase in sales that can be achieved based on target operating, debt, and dividendpayout
ratios” (p. 744). Given this definition, a company can determine if their projected sales are
a realistic goal. Additionally, Van Horne (1998) provides two models for determining SGR, one
that represents a steady state and a model that takes changing assumptions into consideration.
MARKET ORIENTATION
Jaworski, Kohli and Sahay (2000) discuss the differences between a company being marketdriven
and a company driving markets. The former referring to a company that understands and
reacts to the preferences of the consumer while the later influences the structure and behaviors in
the respective market.
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