Lessons learned today won’t necessarily work tomorrow when it comes to sustaining rapid growth, according to a new study investigating why some firms grow faster than others.
The research investigates whether rapid firm growth can be stimulated by specific management strategies. It reveals certain strategies in areas such as marketing and customer service are adopted by fast-growing firms or “gazelles.” It also finds such strategies generally need to change with the times and a firm’s ability to make adjustments helps to sustain growth.
“Gazelle-like growth appears to be fragile and only a small portion of firms can jump the hurdle of sustaining it,” says lead study author Simon Parker, Professor in Entrepreneurship and Director of the Driving Growth Through Entrepreneurship & Innovation Cross-Enterprise Leadership Research Centre at the Richard Ivey School of Business.
“Firms are unlikely to sustain success if they attempt to draw lessons from observing growth in one period and then routinely apply these lessons at a different point in time.”
The study, “What happens to gazelles? The importance of dynamic management strategy,” will be published in an upcoming edition of the scholarly journal, Small Business Economics.
It is co-authored by David J. Storey, professor of CSME and Enterprise Group of the Warwick Business School, and Arjen van Witteloostuijn, professor of economics and applied economics at the University of Antwerpen.
Some strategies that appear to contribute to rapid growth include:
Maintaining a core product or service rather than diversifying; Having and using a specialised marketing department; Using customer surveys rather than customer complaints as a basis for quality control; Restricting share issues to workers or outside investors, thereby enabling management to retain control.
However, the researchers stress best practices of one period may prove counter-productive in a later period.
“There are key strategies that seem to help gazelles to become or remain large, but, to sustain growth, there need to be dynamic, rather than static, management strategies,” says Parker. “Timely adaption of strategies is key.”