Management Decision
Emerald Article: Rapid growth and rapid internationalization: the case of
smaller enterprises from Canada
Christian Keen, Hamid Etemad
Article information:
To cite this document: Christian Keen, Hamid Etemad, (2012),"Rapid growth and rapid internationalization: the case of smaller
enterprises from Canada", Management Decision, Vol. 50 Iss: 4 pp. 569 - 590
Permanent link to this document:
http://dx.doi.org/10.1108/00251741211220138
Downloaded on: 25-04-2012
References: This document contains references to 92 other documents
To copy this document: permissions@emeraldinsight.com
Access to this document was granted through an Emerald subscription provided by ZHEJIANG LIBRARY
For Authors:
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service.
Information about how to choose which publication to write for and submission guidelines are available for all. Additional help
for authors is available for Emerald subscribers. Please visit www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in
business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as
well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is
a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.
*Related content and download information correct at time of download.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0025-1747.htm
Rapid growth and rapid
internationalization: the case of
smaller enterprises from Canada
Christian Keen
Rapid growth
569
Department of Management, Universidad ORT Uruguay, Montevideo,
Uruguay, and
Hamid Etemad
Department of International Business, McGill University, Montreal, Canada
Abstract
Purpose – The main objective of this paper is to develop a deeper understanding of high growth and
rapid internationalization characteristics in terms of: empirically characterizing growth deriving the profile
of high-growth enterprises, exploring influential factors in high-growth, pointing out the factors that
stimulate internationalization, presenting the combined influence of these factors in both the high-growth
and early internationalizing enterprises, and formulating research-based policy recommendation for longer
and higher growth rates and for decreasing the chances of demise in such younger firms.
Design/methodology/approach – The authors have built a longitudinal sample of more than 1,140
micro, small and medium-sized enterprises that have grown at exceptionally high rates for at least five
years at the earlier stages of their life-cycle, and even from inception in some cases. The data-base’s
origin is a popular Canadian business publication, the Canadian Business Magazine, which annually
identifies and ranks growing firms in order to publish an annual list called “Profit 100: Canada’s 200
fastest-growing companies”.
Findings – The findings of this analysis point to a rich population of high-growth enterprises with
diverse ages, locations, sizes and revenues that manage to achieve high domestic and international
growth for much longer and in ways not explained by the extant literature across time and industries.
Research limitations/implications – This research carries the limitations of secondary data. In spite
of its richness in terms of the high growth rates, annual lists offer a limited number of attributes per firm.
It would be highly recommendable to use case studies in future research and broadly based surveys are
necessary for deeper understanding of both the high and rapid growth and internationalization as well as
the influential factors, including the internal characteristics of its agents, especially the management.
Practical implications – This research indicates that rapid growing enterprises (RGEs) and rapid
internationalizing enterprises (RIEs) are distinctive firms and are primarily small and medium-sized
enterprises. Although the relative frequency of the appearance of various firm size-categories varies
over time, RGEs are found across all the size and age categories. Although their total number as a
proportion of all continuing firms in the economy is small, they are among the highly prominent and
contributing corporate citizens.
Social implications – This topic deserves the attention of scholars for the remarkable potential it
offers to uncover the puzzle of growth, which is a time-dependent phenomenon. HGEs attain higher
growths in shorter times; thus requiring a relatively shorter tracing of the growing firms. The topic
also deserves the special attention of policy makers as HGEs generate employment, income, social
benefits, taxes and wealth at much higher and faster rates than an average growing firm.
Originality/value – The attractive features of HGEs’ and RIEs’ high-growth phenomenon compelled
the authors to explore the topic in more depth than initially intended. By examining rapidly-growing
smaller and younger enterprises, this study covers a wide gap in the extant literature of growth pertaining
to the internationalization of smaller firms and thereby contributes the interaction of the two fields.
Keywords Small to medium-sized enterprises, Entrepreneurialism, Competitive strategy
Paper type Research paper
Management Decision
Vol. 50 No. 4, 2012
pp. 569-590
q Emerald Group Publishing Limited
0025-1747
DOI 10.1108/00251741211220138
MD
50,4
570
Introduction
Rapid-growth enterprises are a selected group of firms with significant impact on their
respective economies as they create more jobs while their larger counter parts lose net
jobs (Acs and Mueller, 2007; Halabisky et al., 2006). They also create more wealth and
innovate more effectively (Markman and Gartner, 2002; Rothwell and Dodgson, 2007;
Van Praag and Versloot, 2008) than other firms. Most of these types of companies
internationalize[1] their activities early-on in their life and tend to have greater
productivity growth (Baldwin and Gu, 2003). For example, a recent Industry Canada
report states that “growth firms are very important to the Canadian economy; hyper
growth firms accounted for 4 percent of continuing business between 1993 and 2003,
but were responsible for 45 percent of net jobs created by continuing firms” (Parsley
and Halabisky, 2008, p. 1). Business community has long recognized the importance of
rapid and high-growth enterprises, celebrated their success and held-them up as
models to be emulated. Similarly, a UK NESTA report, suggests that high-growth
firms are “responsible for 1.3 million out of the increase of 2.4 million new jobs in
established businesses employing ten or more people between 2005 and 2008 (54 per
cent).” (Anyadike-Dane et al., 2009, p. 4). Business publications, such as Canadian
Business and Inc. Magazine (a US-based publication), have carefully identified and
published annual lists of such firms in Canada and the US for the past quarter century.
Best seller books, such as the Blue Print to a Billion: 7 Essentials to Achieve Exponential
Growth (Thomson, 2005), have prominently featured high-growth firms for their
achievements and impact for the general population[2].
However, with the notable exception of a few (Davidsson et al., 2009; Shepherd and
Wiklund, 2009) there is little systematic and analytically-based knowledge about
growth processes in these firms and factors influencing the growth process. Similarly,
we do not know how these firms attain higher-growth, while some of their larger
counter-parts with rich resources fail to do so and even cannot survive. To the extent
that other entrepreneurs and firms learn from and emulate such firms they enable the
society to attain economic and social benefits associated with the high and rapid
growth phenomenon; thus pointing to the importance of potent public policy
formulation to induce high-growth. This resonates with the Bygrave and Minnti’s
(2000) and Minniti and Bygrave’s (1999) analysis suggesting that entrepreneurs learn
from one-another and their enterprises contribute to the society’ well-being and
economic growth (Bygrave and Minniti, 2000, p. 25)[3].
The main objective of this paper is to develop a deeper understanding the
characteristics of high-growth and rapid internationalization in general, and those of
Canadian enterprises in particular, in terms of:
.
empirically characterizing growth by deriving the profile of high-growth
enterprises;
.
exploring influential factors in high-growth;
.
pointing out the factors that stimulate internationalization; and
.
presenting the combined influence of these factors in both the high-growth and
early internationalizing enterprises.
Following this introduction, a brief background and a survey of literature will be
presented. A discussion of research question and the literature review provide for the
theoretical underpinnings of the phenomenon and will allow for formulation of six
hypotheses. The methodology for forming a database of Canadian high-growth
enterprises and selecting a sample of high-growth enterprise for further analytical
examination will appear next. Prominent characteristics of these enterprises, including
age, location, growth in revenue and number of employees, temporal and
internationalization processes of these firms are presented next. Then, the analysis of
the hypotheses and findings will be presented and discussed. Finally, conclusions,
implications and suggestions for further research and public-policy formation appear last.
Rapid growth
571
Literature review
The high and rapid growth phenomenon
The phenomenon of rapid growth was initially viewed as special case of “normal”
growth, which has been of interest to scholars from different perspectives for a long
time, including economic growth, job creation, entrepreneurship, management of small
enterprises, and strategy (Fischer and Reuber, 2003; Lotti et al., 2003). Birch (1987)
drew attention to the significant contributions of rapid growth of smaller firms to
creation of jobs, generation of income and positive impacts at the local and national
levels, but he did not reflect on how rapid growth is achieved. However, appropriate
data did not exist then and the lack of information still persists in many countries
(Hoffman and Junge, 2006; Schreyer, 2000). A further complicating factor is that
definitional aspects have not reached a consensus (Delmar et al., 2003; Shepherd and
Wiklund, 2009).
In general, rapidly growing enterprises (RGEs) refer to companies that achieve
high-growth in a relatively short period of time. Birch (1987) profiled a family of firms
that grow at higher rates and made more extensive contributions to employment than
others. Birch et al. (1993) characterized firms that grow at higher than 20 percent per
annum as “gazelles”. This annual growth rate corresponds with a five-year compound
growth rate (FYCGR) exceeding 149 percent. Markman and Gartner (2002, p. 67)
reported on speedier gazelles, with even higher FYCGRs, falling between 500 and
30,000 percent. They characterized that range as “extraordinary growth”. The above
discussion suggests that there exists a continuum of growth rates, ranging from
normal growth (1 to 10 percent) to extraordinary growth (over 200 percent per annum),
parts of which are well-populated and well-characterized and others are not yet well
defined. Currently, only two categories of firms – gazelles and firms with
extraordinary growth – have been empirically identified and characterized, but
other categories remain under-defined or uncovered, as highlighted in Table I.
Annual growth rates (%)
Corresponding FYCGR (%) *
0 to 10
10 to 20
20 to 43.1
43.1 to 213.2
213.2 and higher
0.0 to 61
61 to 149
149 to 500
500 to 30,000
30,000 þ
Gazelles
Gazelles
Gazelles
Birch, Hagerty and Parson’s
characterization
Uncovered Uncovered
Markman and Gartner’s
characterization
Current characterization
Extraordinary
Uncovered Uncovered Uncovered
growth
Normal
growth
Normal
growth
Gazelles/
RGEs
RGEs
Uncovered
RGEs
Table I.
The continuum of growth
rates and their
corresponding
characterizations
MD
50,4
572
As shown in Table I, gazelles are defined as firms with growth rates exceeding 20
percent per annum (or FYCGR $ 149 percent) with no upper bound and a lower bound
that has not been too difficult to achieve, while the range for extraordinary growth is
bounded on both ends (500 percent # FYCGR # 30,000 percent), with a higher lower
bound than that for gazelles, leaving an undefined gap between 149 and 500 percent
(FYCGRs). Similarly, growth rates higher than 30,000 percent (FYCGRs) are also
under-defined and not frequently achieved. This perspective suggests a need for a
further exploration of growth rates. Furthermore, although a few empirical studies
have suggested certain bounded ranges for different growth rate (Birch, 1987;
Markman and Gartner, 2002), the agents contributing to high and rapid growth have
not been profiled. We suggest that this lack of clarity may have hindered research and
contributed to RGEs being viewed as “illusive” (Barnard et al., 1998; Parker et al., 2005).
However, there is little disagreement that RGEs’ contribute to job and income creation
significantly. However, since these firms represent a small portion of the continuing
domestic population of firms, less than 5 percent in Canada and in the UK
(Anyadike-Dane et al., 2009; Halabisky et al., 2005), they are difficult to study. This
discussion suggests that there is a strong need for an examination of the rapid growth
phenomenon and portraying an empirically-based profile of its agents.
Towards high-growth and rapidly internationalizing enterprises
David Birch’s (1987) seminal research pointed to the high impact of rapidly growing
enterprises (RGEs) on the economy of the US. He also showed that such firms created
more net jobs as larger firms contracted. This phenomenon is well recognized in
Canada (Bordt et al., 2005; Parsley and Halabisky, 2008) and UK (Anyadike-Dane et al.,
2009) as noted earlier. Although the management of strategy and employment are
internal challenges, the external impact of the high-growth phenomena are significant.
In addition to high employment, some 50 percent of innovations and 95 percent of
radical innovations are also attributed to such firms (Robson et al., 1993). Furthermore,
the literature suggests that high-growth in small and medium size enterprises (SMEs)
tend to be in part due to entrepreneurial initiatives, R&D expenditures, innovativeness,
and faster commercialization of knowledge in these firms (Bordt et al., 2005; Dechenaux
et al., 2003; Yang and Huang, 2005).
High and rapid-growing enterprises gain further competitiveness as their scale
economies increases thereby enabling them to expand beyond their domestic market
and penetrate into the international markets. We refer to this international expansion
as internationalization. When RGEs continue their rapid growth in international
markets, we call them as rapidly internationalizing enterprises (RIEs). However,
different terms and terminologies are also used. Rennie (1993) reported on smaller
younger Australian firms that entered larger international markets at or near inception
to overcome home market limitations and called them “Born Global”. McDougall and
Oviatt (1994) identified a family of smaller and younger firms in some eleven countries
that generated a “significant” portion of their revenues from international markets at,
or near, inceptions and called them as international new ventures (INVs). Knight and
Cavusgil (1996) suggested that “born global” in the US generated some 25 percent of
revenues in international markets. Furthermore, McDougall and Oviatt (1994)
suggested that these firms’ pattern of growth and internationalization would not follow
the extant theory. Etemad and Keen (2009) has found that most of the high-growth
enterprises were true born global that derived a large portion of their revenues from
international sources. About 65 percent of the firms in their sample derived more than
50 percent of their revenues from international sources. Keen and Etemad (2008, 2011)
have identified a large number of Canadian high-growth firms that have attained
high-growth and internationalized rapidly and extensively. The fundamental question
is what accounts for such high-growth at home and international market
(internationalization). In the next section, we examine potentially influential factors.
Economies of agglomeration and externalities: location and rapid-growth
This aspect is related to the expansive literature on the economics of proximity and
agglomeration in a region (Torre and Rallett, 2005; Breschi and Lissioni, 2001), which
have served as the policy instrument for enterprise and job creation in regional
industrial clusters (Porter, 1998). The idea of agglomeration economies, based on
geographical proximity, goes back to Alfred Marshall (1961). Marshall’s arguments
served as the genesis for the formulation of public policy that encouraged the
formation of regional industrial clusters later on. Marshall attributed certain positive
externalities to being located in the geographic proximity of an industrial region,
resulting in additional competitiveness for firms active in the region. He observed, for
example, that a cluster of firms in a region would result in higher demand for labor,
which would in turn attract higher supply of laborers, leading to lower wage rates
enabling specialization and division of labor enhancing the cluster firms’
competitiveness.
One of the market manifestation of the added competitiveness would, among others,
be higher or faster growth. Porter (1998) further elaborated on Marshall’s
agglomeration and the concept of externality by arguing that cluster of firms within
an industry, as well as the related and support firms, would prefer to be located close to
their competitors for monitoring them and also close to their suppliers and buyers in
order to benefit from higher supply of skilled workers and new market developments.
Porter (1998) defined an industrial regional cluster as the “geographical concentration
of interconnected companies and institutions in a particular field” (p. 2). Most of the
policy instruments designed for providing environmental incentives (Krugman, 1991a;
Shirley, 2005) for increasing a region’s innovativeness (Porter, 1998) and creating
functional cities or regions (Pouder and St John, 1996; McEvily and Zaheer, 1999) are
based on conceptual extensions and variations of regional clusters’ economies and the
externalities associated with the economics of geographic proximity (Maccarini et al.,
2004; Johansson, 2004; Feldman et al., 2005). One of the main characteristics of
“economics of proximity” in regional cluster is to enable firms to collaborate with
others within the proximity of the region. Such proximity, both in geographical and
industrial terms, may facilitate participation in collaborative arrangements and in
networks to further enable high-growth and rapid internationalization through higher
competitiveness. Similarly, such collaborative arrangements may also allow
companies to access resources embedded in the regional networks, including the
unused or underutilized resources of network members, thus reducing the adverse
impact of SME’s resource constraints. It may also help firms to capitalize on economies
of scale and scope through the division of labor within the regional and industrial
networks. Overall, it may reduce their combined costs, enhance their joint efficiencies
and competitiveness for enabling higher and earlier growth that would not be
Rapid growth
573
MD
50,4
574
otherwise possible without networks, network membership and their mutual
collaborations (Brunello and Gambarotto, 2007; Combes and Duranton, 2006; Gulati,
1995) in the region. Geographical proximity also provides easier access to a high
density of competitive information and spill over (Breschi and Lissioni, 2001; Acs et al.,
2009) associated with a regional industrial cluster thereby providing for higher
efficiencies not available elsewhere. The formation of alliances and collaboration with
others embedded (Granovetter, 1985) in a synergistic network such as those in a
globally competitive industrial regional clusters, or in functional regions (Karlsson
et al., 2008), might reduce firm’s search, acquisition and transaction costs (Bougrain
and Haudeville, 2002; Williamson, 1975) in areas that may otherwise expose them to
higher costs and risks, especially in highly competitive foreign markets (Hymer, 1960;
Covin and Slevin, 1989).
The presence of such policies resonates with Hallberg (2001, p. 8), who discusses
enabling environments that “provide an enabling business environment that opens
access to markets and reduces policy-induced biases against small forms”. This
discussion can be summarized in three related arguments. First, collaborative
buyer-supplier relations within the cluster, or the region, would regulate competition,
reduce opportunism and encourage a cooperative hyper-competition among the firms
(D’Avani, 1999; Chen and Glen, 2004; Jack et al., 2004) within the cluster environment,
which will distinguish firms based in such regions from others. Similarly, Karlsson
et al. (2008) point to increased innovation, knowledge creation in what they call
“functional regions”, which in turn enable internationally-oriented entrepreneurs and
firms based in such regions to sustain or further their growth through access to
international markets. Second, Audertsch and Sanders (2008) suggest that
globalization has given rise to the emergence of “entrepreneurial economy”, whereby
internationally oriented smaller firms take advantage of the falling barriers in
globalized markets to grow even further than they would have at home. Third, the
higher competitiveness enables rapid and intense internationalization that represent a
means for cluster-based firms to exploit the advantages embeddedness in a given
territory to exploit the associated positive externalities (skilled and specialized labor,
specialized services, access to “collective international knowledge”, easy access to
information on the internationalization strategies of main local competitors) on a larger
scale in international markets (Maccarini et al., 2004). In sum, the above literature
suggest that firm’s growth is related to their location and size, incentives associated
with that location and its positive environmental incentives enable higher growth.
Consequently, a higher concentration of rapidly growing smaller firms is more likely to
be found in certain functional and enabling locations. The above discussion suggests
the formulation of the first family of hypotheses, in the null form, as follows:
H1a. There is no significant regional difference in the RGEs’ growth rate-related
characteristics.
H1b. There is no significant difference in the growth rates of RGEs with different
sizes in terms of the number of employees.
H1c. There is no significant difference in the growth rates of RGEs of different age
(age of the enterprise from inception).
International expansion and resource-based view (RBV) of the firm
There is a wealth of literature pointing to the higher and faster growth of smaller firms
that also internationalize earlier-on and are among the newly-emerging forms of
organizations to which McDougall and Oviatt (1994) referred as international new
ventures (INVs). The literature of entrepreneurship and small firm growth document a
host of influential factors, both internal and external to the firm, stimulating growth
(Covin and Slevin, 1989; Lu and Beamish, 2001; Wiklund et al., 2009). These smaller
firms manage to rise above the adverse confluences of factors that cause demise in
other similar firms and even grow at high rate beyond the short term. While some of
their growth patterns are partially explained by the extant theories of growth and
internationalization of smaller firms from different perspectives, including those
emanating from entrepreneurship (Acs and Yeung, 1999; Morena and Casillas, 2007;
Fischer and Reuber, 2003), international business (Maccarini et al., 2004; Nummela et al.,
2004), economics of agglomeration and regional clusters (Huggins, 2008; Johansson,
2004) and management of small enterprise (Covin and Slevin, 1989; Wiklund et al.,
2009), there is a need for an integrated explanation.
From a more encompassing perspective, Penrose (1959, p. 24) considered the firm as
“a collection of productive resources”, including management resources, and suggested
that growth is the result of a manager’s strategic use of firm’s resources efficiently.
Logically, the state of management impacts smaller firms’ growth more than that of the
larger firms, as smaller younger firms suffer more from constrained resources,
especially management experience and capabilities, than the larger firms. The above
discussion is best captured by Penrose’s (1959) view that a company may or may not
have better resources, but will achieve rents because of making a better use of its
resources (in strategic and efficiency terms). This resonates highly with the issue at the
heart of entrepreneurship: it is not the state of resources that motivate en
entrepreneurs, but it is the ambitions of capable entrepreneurs and managers (Gundry
and Welch, 2001; Wiklund et al., 2003) and their beliefs, attitudes and expectations
(Wiklund et al., 2003), regardless of their resources, that put an entrepreneurial firm on
strategically more efficient path that enables its higher growth. High-growth has been
directly attributed to the presence and preponderance of other influential factors,
prominent among them are the firm’s age and size (Dunne and Hughes, 1994; Knight
et al., 2004), the type of small firms (Verhees and Meulenberg, 2004), firm’s strategic
flexibility. Similarly, the resource-based view of the firm in particular (Barney, 1991;
Grant, 1991; Wernerfelt, 1984) maintains that certain resources are required for
supporting competitive strategy (Porter, 1998) to lead to the higher competitiveness
necessary for higher growth. This higher growth is posted to be contingent upon more
resources.
In contrast, the entrepreneurship literature has focused on opportunity and the
entrepreneur as the enabling factors of growth (Aldrich and Martinez, 2001; Gundry
and Welch, 2001; Upton et al., 2001). Entrepreneurial theories (Kirzner, 1973; Aldrich
and Martinez, 2001; Shane and Venkataramen, 2000) have maintained that a firm’s
growth and overall success emanate from the confluence of the entrepreneurial
characteristics or the fit in entrepreneur-owner-mangers and exploitation of
opportunities (Acs and Yeung, 1999; Shane and Venkataramen, 2000). While
Schumpeter (1934) saw a firm’s growth as the consequence of creating opportunity in
the market place and fulfilling it through the process of creative destruction, Kirzner
Rapid growth
575
MD
50,4
576
(1973) suggested that firms would only need to identify and then respond to such
opportunities through strategic arbitrage. Therefore, the managers’ cognition of how to
identify and fulfill opportunity (e.g. effectively formulating strategies for operating at
the dynamic nexus of opportunity, information and resources as Shane and
Venkataramen (2000) put it) may have a significant impact on the firm’s growth.
However, this stance can be combined with the Penrose’s view of resource utilization
by managers: For example, when earmarked resources are not efficiently utilized to
realize an opportunity, a firm will have to bear the additional costs of acquiring more
resources. Such inefficiencies result in lower, or slower, growth. This argument
suggests that size, as a proxy for the possession of resources, may not be an
appropriate indicator, because entrepreneurial firms with highly efficient and effective
entrepreneur-owner-managers can compensate for their relatively poorer state of
resources, whereas firms with richer resources but ineffective managers may fail to
realize their full resource potentials. Size and age may enable higher growth, but they
neither are necessary nor sufficient conditions[4].
There is a general agreement that the younger smaller firms suffer from constrained
resources, which may include management capability and experience, especially in the
early stages of their lifecycles (Davidsson and Honig, 2003; Karra and Phillips, 2004;
Upton et al., 2001), which may inhibit rapid growth. However, the entry into the much
larger international markets offer higher opportunities than a firm’s domestic market
(which are necessary for higher growth) may compensate for the initially weaker state
of entrepreneurship in smaller firms. Not only does the larger size and the higher
diversity of international markets offer richer opportunities, but also the risk of
realizing opportunities may be reduced as diversity may create room for new and novel
activities not possible in the domestic context. This suggests that not only growth is
dependent on the firm’s state of management (with number of employees as a proxy)
but growth is also moderated by managerial acumen in seeking opportunity and on the
way opportunities are exploited. In summary, the extant theory points to an unclear, if
not contradictory, a-priori relation between internationalization and rapid growth. We
formulate the second family of hypotheses, in a null form, to enable results to point to
the actual direction, as follows:
H2a. There is no significant difference in the growth rates of strictly domestically
oriented and internationalized firms.
H2b. There is no significant difference between the internationalization intensity
for RGEs with different number of employees.
H2c. There is no significant difference between the internationalization intensity
for RGEs of different ages.
These families of hypotheses enable us to explore selected aspects of rapid growth and
internationalization and examine their variations across a few factors such as location,
size, age, and internationalization intensity.
Methodology
We have built a longitudinal sample of more than 1,140 micro, small and medium-sized
high-growth enterprises that have grown at exceptionally high rates for at least five
years at relatively earlier stages of their life-span and in some cases from inception[5].
The data-base’s origin is he most prominent Canadian business publication, the
Canadian Business, which annually identifies and ranks growing firms in order to
publish a highly-popular annual list called “Profit 200: Canada’s 200 fastest growing
companies”[6]. Although there are other lists of high-growth companies
(e.g. McKinsey’s Top 50 High Technology, Touch Ross Top Fifty, etc.), we decided
to use this list as a starting point because it uses a five-year time span and for its
methodological and measurement prudence. In building the data base, we were
cognizant of the recommendations of researchers regarding validity and concurrent
reliability of growth measurements (Shepherd and Wiklund, 2009; Davidsson et al.,
2009; Weinzimmer et al., 1998) and complied with them throughout this research.
The annual members of the list had attained the highest growth in revenues over
five consecutive years ending at the beginning of the publication year. We have
compiled selected characteristics of all 200 members of six annual listings, from 2003 to
2008. As a small number of firms sustain their high-growth for more than five years
and appear in more than one annual list, we decided to keep only the first appearance
of the firm in the annual listing of such firms to avoid double counting. As a result,
each firm appears only once in the database.
The criteria for eligibility are very strict (also methodical, rigorous and transparent).
In order to be eligible for consideration, certain pre-requisites must be met and much
information must be submitted for further analysis:
(1) All firms must submit complete financial statements based on GAAP for five
consecutive years for calculating their five-year growth rates.
(2) They must have been founded and been generating revenues for at least five
consecutive fiscal years from the first week of their fiscal year five years ago
(called the base of “t”, hereafter) and to show continued five full years of revenue
growth (called “t þ 5”, hereafter).
(3) All firms must have had their headquarters in Canada with a significant
Canadian operation and be independent as of December 31st of the nomination
year.
(4) All firms must have had more than 50 percent Canadian ownership if a
privately owned company, while public companies with 50 percent or less
Canadian ownership are judged on a case-by-case basis).
(5) All firms must have had a minimum revenue of $100,000 in the base year “t” in
order to ensure that their rapid growth had been built-upon a substantial base.
(6) All firms must have had a minimum revenue of $1,000,000 in the most recent
year (t þ 5); and independent contractors are excluded.
(7) All firms must have also had some full-time and part-time employees in the
base year, which are both included in the head count.
(8) Subsidiaries or divisions of other companies, except for holding companies are
excluded from consideration.
Sample characteristics
Although the majority of the 1,200 fastest growing, Canadian-based and
independent companies in the original database qualify as SMEs, the selection
criteria does not impose size restrictions; and as a result, the list includes firm with
Rapid growth
577
MD
50,4
578
Table II.
Summary profiles of
sample characteristics of
selected characteristics
sizes ranging from micro to large firms. Table II provides a summary profile of
these high-growth and rapidly internationalizing firms. A total of 46 of these
companies are micro enterprises with one to nine employees, while there are 108
large firms with more than 500 employees with a wide range; but more than 85
percent are SMEs (see Tables II and III).
Internationalization appeared to have had a positive impact on growth rates and
other characteristics. We dichotomized the sample based on internationalization
intensity in order to compare the impact of internationalization. As shown in Table II,
internationalized firms have more impressive characteristics across all variables. For
example, while the local enterprises (i.e. no reported international sales) attain
impressive average FYCAGR of 1,560 percent, firms with internationalized activities
achieve even higher FYCAGR of 1,883 percent.
For this latter group, about 72.5 percent of the sample, the average
internationalization intensity measured in terms of the proportion of revenues from
international sources is about 55 percent with a median of 65 percent. These young firms
have an average age of less than 11 years with the median of nine years from inception.
Their revenues after five years of high-growth increase by a factor of 10, more than $27
million for the local firms and more than $50 Million for internationalized firms. Finally,
the median FYCAGR for the local high-growth firms is consistently smaller than the
corresponding average FYCAGR for internationalized firms, indicating that the
cumulative growth distribution is skewed to the left of the median for the entire sample.
In other words, more than 50 percent of the firms in the sample attained larger
FYCAGRs than that of the median over five year.
Exports as % revenues (n ¼ 1136)
Revenues @ t (n ¼ 1139)
Revenue @ t þ 5 (n ¼ 1139)
Age (n ¼ 1139)
Staff @ t (n ¼ 1112)
Staff @ t þ 5 (n ¼ 1138)
Delta staff (n ¼ 1138)
Growth rate (n ¼ 1138) (%)
Median
Average
Maximum
Minimum
0.26
$1,011,760
$10,123,0630
9
13
67
48
729.5
0.396
$4,803,537
$44,300,054
10.64
36
202
182
1,795
100
$184,000,000
$2,130,210,580
40
484
6,993
6,520
112,519
0
$16,980
$512,850
5
2
2
0
179
Local firms (n ¼ 313)
Average
Median
Table III.
Comparison of selected
characteristics for local
firms and
internationalized firms
Exports as % of revenues
Revenue @ t
Revenue @ t þ 5
Age
Staff @ t
Staff @ t þ 5
Delta staff
Growth rate (%)
0
$3,233,023
$27,400,00
11.48
31
175
145
1,560.5
0
$853,908
$7,530,641
9
10
41
29
613
International firms (n ¼ 826)
Average
Median
0.547
$5,398,660
$50,700,00
10.98
38
213
56
1,883.7
0.65
$1,147,792
$11,500,000
9
15
77
197
786
Analysis
Given the distributional properties of the data and the non-random sampling, we
choose non-parametric tests because they assume fewer statistical restrictions
(Robinson and Hofer, 1997) and produce more conservative results than parametric
tests (Siegel, 1956) as statistical requirements are not violated. As we aim to compare
firm characteristics across geographical locations, size (defined by both the revenue
and employment sizes), age and incremental employment over five years (i.e. Staff @
t þ 5 less Staff @ t, called Delta Staff in Tables II and III and hereafter) rather than
explaining the causality in potential relationships, we used two-tailed tests of
significance. The Wilcoxon-Mann-Whitney and Chi-square tests were used to test the
difference of the means in pair-wise comparisons. Similarly, the Kruskal-Wallis test, a
nonparametric alternative to the analysis of covariance, was utilized to test for
significance in n-sample cases (for a detail description see Siegel, 1956).
Consistent with the extant literature on different categories of firm sizes, we
assigned firms to four categories based on the number of employees: micro (1-9), small
(10-99), medium, (100-499) and large (500 and more employees). Given the relatively
lower number of firms based in the Canadian Prairie (Manitoba and Saskatchewan),
Maritime (New Brunswick, Nova Scotia and Prince Edward Island) and the northern
provinces and territories, we pooled them all together in a category called the “rest of
Canada”. Therefore, we will be analyzing regional influence of five “regions” that refer
to Alberta, British Columbia, Ontario, Quebec Provinces and the rest of Canada pooled
together. We also followed Statistics Canada’s practice of assigning each firm’s
location to one of five “regions” and referring to them as such hereafter. As noted
earlier, we have stated our hypotheses in the null form to allow for objective
interpretation of the empirical results of the statistical tests.
The first hypothesis was designed to detect the potential differential impact of
different geographic locations on the firms’ growth-related characteristics resulting
from high-growth after five years. In our extensive statistical testing in search of
differential regional impacts, we did not find significant statistical difference in
growth-related characteristics of different firm sizes across the five regions. However,
we found significant difference between the two extremes (i.e. micro and large firms).
These two firm sizes have more pronounced differences regardless of their
internationalization. Location seems to be relevant only when small and large firms
(in pair-wise comparison) are compared at 5 percent significance level and the micro
and large firms at a 10 percent significant level. The results for the tests are
summarized in Tables III and IV. Stated differently, we found strong evidence (at a 5
percent significance level) that small-large firms and weak evidence that micro-large
differ with respect to their location. The comparative impact of different growth-related
characteristics of different firm sizes for local and internationalized firms are shown in
Table III. The differential impact of location for both the local and internationalized
firms are shown in the column entitled “location” in Tables IV and V respectively.
Regarding age and size hypotheses, the results for age and the two indicators of size
are shown in Tables IV and V under three different columns entitled “Age”, “Revenue
@ t þ 5” and “Delta Staff”. The relationships between the indicators of age and size
categories are mixed. The Wilcoxon-Mann-Whitney tests suggest that there exists a
statistically significant difference between the means of firms in terms of age except for
the case of micro and small firms at a 5 percent significant level. The revenue @ t þ 5
Rapid growth
579
MD
50,4
580
Table IV.
Comparison of the
growth-related
characteristics of local
firms
Prob . jzj and Z values
Revenue @ t þ 5
Age
Growth rate
Delta staff
Location
Micro-small
0.000
24.159
0.328
20.977
0.242
1.170
0.000
2 7.790
0.754
Micro-medium
0.000
25.950
0.044
22.009
0.748
0.321
0.000
2 7.315
0.325
Micro-large
0.000
26.030
0.274
21.092
0.062
21.865
0.000
2 6.141
0.073
Small-medium
0.000
27.860
0.039
22.063
0.203
21.272
0.0000
2 11.604
0.258
Small-large
0.000
27.875
0.582
20.550
0.0007
23.376
0.000
2 8.272
0.038
Medium-large
0.000
25.738
0.443
0.766
0.017
22.374
0.000
2 7.503
0.260
Prob . jzj and Z values
Revenue @ t þ 5
Age
Growth rate
Delta staff
Location
Micro-small
0.003
22.972
0.263
21.118
0.448
20.758
0.000
2 8.262
0.622
Micro-medium
0.000
27.462
0.016
22.398
0.235
21.186
0.000
2 8.101
0.817
0.0010
23.279
0.080
21.748
0.000
2 7.508
0.705
Micro-large
Table V.
Comparison of the
growth-related
characteristics of
international firms
0.000
7.500
Small-medium
0.000
217.451
0.000
24.294
0.173
21.361
0.000
2 21.295
0.420
Small-large
0.000
214.855
0.000
25.450
0.022
22.287
0.000
2 14.987
0.718
Medium-large
0.000
211.409
0.003
22.892
0.222
21.220
0.000
2 13.580
0.861
and delta staff significantly differ by size of firms. However, the pair-wise comparison
of different size categories suggests that there is no evidence that growth rate differs
across the various size categories except for the pair-wise comparison of small and
large firms. We found evidence that micro-small, micro-medium firms and small
medium firms do not differs significantly on their growth rates. However, the evidence
indicates that large firms grow faster than small and medium-sized firms and there is
weak evidence to suggest the same for the case of micro-large firms. Similarly, we did
not find evidence that the size in terms of number of employees is influenced by the
firms’ regional location. The results of the tests are summarized in Tables IV and V
under the corresponding columns.
With respect to the impact of internationalization, we found strong evidence that
local firms statistically differ from their internationalized counterparts with respect
practically all growth related characteristics. Our overall comparison of local and
international firms showed that they significantly differs in term of revenue at t þ 5,
growth rate, delta staff, staff at t, staff at t þ 5. Furthermore and as shown in Table VI,
the sign of Z values is always in favor of the internationalized firms in comparison to
local firms. For example, the increases in revenue (Revenue at t þ 5) and employment
size (Delta staff) of the internationalized firms are significantly larger (using the
Wilcoxon-Mann-Whitney test). In terms of age, only micro-medium and small-medium
firms showed weak evidence that their age differ (alpha ¼ 5 percent).
Based on the results presented in Table VI, we can strongly argue that
internationalized firms have attained higher figures, while the local and international
firms have similar means.
Rapid growth
581
Discussion
Factors enabling high-growth rates
Our analyses show that Canadian RGEs are not exclusively in high-knowledge
intensive or high-technology industries or specific to one or two regional industrial
clusters. Nevertheless, Ontario, British Columbia, Alberta and Quebec have the highest
concentration of RGEs and RIEs but these companies are also present in the rest of the
provinces. Similarly, they are found in a diverse set of industries and different sizes
with different, but all high, growth rates across times. Interestingly, more than two
thirds of them are active in the international markets. Their average five-year
cumulative growth rate is 1,795 percent. On average, they are less than ten-years old.
The number of their average employees in the base year is about 36 staff members,
which increases to more than 200 after five years of growth. While domestically
oriented firms (RGEs) have impressive figures, their internationally oriented
counterparts (RIEs) achieve higher performance. For example, they achieve higher
average growth rates (1,883 vs 1,560 percent), generate higher revenues ($50,700,000 vs
$27,400,000) and become larger (213 vs 175 staff members) after five years of
high-growth at a younger age (10.98 vs 11.48 years). Although, they constitute a small
portion of continuing firms in Canada; they are by no means “illusive” as there is a
continuous stream of them in all sizes across time and industries. While Table I
provides the profile of these firms in terms of selected characteristics of the entire
population of REs, Table II distinguishes RGEs that export from those who do not in
our sample. We called them “internationalized firms” and “local firms”, respectively. In
fact, the former characterize typical rapidly internationalizing enterprises (RIEs).
Regarding influential factors, the literature of growth points to a confluence of three
influential factors as noted earlier: external influences, internal factors and their
interactions. The economics of agglomeration (Marshall, 1961), externalities (Combes
and Duranton, 2006; Johansson, 2004; Scitovsky, 1954), regional industrial clusters
(Marshall, 1961; Feldman et al., 2005) and conducive policy environment (Acemoglu
and Johnson, 2005; Porter, 1990) are among the external factors found to be influential.
Prob . jzj and Z values
Local-international firms
Revenue @
tþ5
0.000
2 5.174
Age
Growth
rate
0.922
0.000
20.097 24.712
Delta
staff
Staff t
0.000
0.0007
2 5.016 23.404
Staff @
tþ5
Location
0.000
24.948
0.017
2.386
Table VI.
The comparison of the
growth-related
characteristics of the local
and international firms
MD
50,4
582
Such factors are capable of generating certain economies and conferring the
corresponding advantage on the firms located in a region that are not available to firms
located elsewhere. These economies reduce the firm’s transaction costs (Williamson,
1975), which contribute to the firm’s competitiveness and consequent high and rapid
growth. Logically, when a firm’s management recognizes and exploits such regional
incentives and externalities to its advantage, it can grow faster.
However, our analysis provides almost no support for such external economies as
factors impacting rapid growth and rapid internationalization, although smaller firms
appear to benefit from location-specific advantages more than the larger firms. We
could not accept the hypothesis regarding the impact of location (H1A) as we did not
find significant difference among RGEs located in different regions in Canada. It
appears that regional incentives and externalities may have fostered higher
concentrations of RGEs; but have not resulted in significantly higher growth rates.
We suggest that this mixed result is because of behavioral factors: when positive
externalities results in incremental competitiveness for some firms, competitors are
forced to catch-up in order to compete for survival. Naturally, strategic emulation is a
logical choice: by moving into enabling environments and regional industrial clusters,
entering firms can access similar pertinent economies for exploitation to gain
comparable competitiveness (Karlsson et al., 2008). These economies would attract
more firms to the cluster, increase competition among them that results in the cluster’s
and region’s growth, but may not lead to competing firms’ higher growth. Therefore,
extra-market economies that are available within a region may confer differential
advantages that help firms to gain initial competitiveness but it would erode over time
as more firms enter the region and vigorously compete for similar advantages.
On the subject of the internal influences, these firms appear to be highly
entrepreneurial. For example, they do not seem to have been hampered by insufficient
resources by compensating for disadvantage, and other deficiencies, by rapidly
covering their potential gaps in order to avoid slowing-down their growth. Their
entrepreneur-owner-managers may have recognized early on that markets treats all
firms roughly in the same fashion and it is hard, if-not impossible, for a young firm to
exploit intra-market externalities, if and when such externalities can be identified
within the market. However, extra market externalities may confer any initial
incremental comparative advantage on the firm to place itself on a higher growth
platform before others migrating to the location to take advantage of them. This
explains as to why location failed to account for RGEs’ higher growth rates averaged
across five years possibly in the later growth stages. This failure also suggests other
interesting possibilities:
.
the theory of agglomeration does not have much explanatory power for RGEs as
high-growth firms use efficiencies that are far beyond regional agglomeration
economies;
.
the contribution of other potent factors may have over taken regional
externalities; and
.
our index of location was not powerful enough to have discriminated between
firms.
In addition, there is little evidence to suggest that these firms have not taken advantage
of inter-firm externalities within their proximity which is not necessarily bounded by
geographical terms. In fact, Author suggest that RGEs and RIEs draw upon their social
network and social capital that may be spread very widely. Such previously-not
identified advantages may have provided opportunities to build a competitive position
as rapidly as possible and to cover for families of gaps facing smaller growing firm
(e.g. shortage of resources, inexperience, information, knowledge, contacts, lack of
international presence, etc.) to avoid the adversity of fundamental chasms that most
newly-emerging firms cannot overcome. Some manage to survive but fall behind
others that grow faster.
Our analysis provides indirect support for internal influential factors. We drew on
the seminal work of Penrose (1959), who was among the earliest scholars to realize the
impact of management as a valuable resource, similar to other valuable firm resources,
as suggested by the resource-based view of the firm (Barney, 1991; Wernerfelt, 1984).
Assuming that management could identify and access all the necessary resources from
external and internal sources, the necessary time and efforts for doing so is bound to
take a toll in terms of taking time and adding to operating costs and even reduce a
firm’s effectiveness, which would adversely impact its growth potential. As Porter
(1991, p. 108) points out, “resources are not valuable in and of themselves, but they are
valuable because they allow firms to perform activities [. . .] business processes are the
source of competitive advantage.” Porter’s suggestion resonates with Penrose’s (1959)
view that a company may not have more resources but still achieve rents because it of
making better use of the resources at its disposal. Our results lend further support to
the potency of internal factors, especially management.
As noted earlier, the above review of literature formed the basis for the formulation
four hypotheses (H1b, H1c, H2b and H2c) designed to examine the impact of age and a
firm’s size on growth in terms of number of employees and revenues as proxies for
resources and endowments. Age presented us with complexity of its own. On the one
hand, progression of time provides the younger, smaller firms with larger customer
base, experience and possibility of accessing larger and riche networks resulting in
larger pool of resources. On the other hand, however, it becomes much more difficult to
maintain the same growth, or attain higher growth rate, as the size of the firm becomes
larger due to growth over time. These conflictive effects may have contributed to the
failure of age in having significance impact on high-growth. Although we did not
intend to show a cause-and-effect relations, both the overall test and pair-wise
comparison tests show that the age difference among firms are not significant. Based
on the results, we can refute the popular myth that only small firms are capable of
rapid and high-growth and high-growth is a small size phenomenon.
Regarding the impact of internationalization in terms of international intensity (the
percentage of revenues generated in international markets), internationalized firms
achieved higher average growth than the high-growth localized firms across the board.
We argued that larger international markets offer larger potential opportunities for
enabling further growth. This argument received empirical support as
internationalized firms have done significantly better than the domestic ones.
Conclusion
This research indicates that RGEs are distinctive firms and are primarily small and
medium-sized enterprises. Although the relative frequency of the appearance of
various firm size-categories varies overtime, RGEs are found across all the size and age
Rapid growth
583
MD
50,4
584
categories. As discussed earlier, this suggests that rapid-growth is not specific to only
smaller sizes. In other words, high-growth is not an argument about the small starting
base (the size @ t) enabling high-growth rates. Nor is it about the advantages of a
particular region, time period or economic conditions. We used a commonly-accepted
four size-categories in terms of micro (one to nine employees), small (10 to 99
employees), medium (100 to 499 employees), and large firms (more than 500
employees). Our analysis clearly shows that high-growth is not specific to smaller
firms, nor is it specific to a particular region. Our analysis also shows that RGEs span
across all the six time periods in our longitudinal sample and the five geographical
regions (four provinces and others combined in a category termed the “rest of Canada”)
in Canada. Furthermore, our findings provide implicit support for the impact of
management capabilities and strategy as influential factors in growth.
As regards the rarity of RGEs, the fact that Canadian Business has identified a
continuous stream of RGEs in most of the Canadian regions across time and sizes,
suggests that they are not rare or illusive. We suggest that the notion of illusiveness
may have arisen in part due to the understudied and less-understood aspects of the
high-growth phenomenon and in part due to the perceived rarity of growth rates
beyond two to three times the normal rates of 1 to 10 percent per annum
(corresponding to 5 percent to 61 percent FYCAGR, respectively). In this study, we
found that more than 300 firms attained FYCAGRs higher than 2000 percent and
internationalized firms achieved even higher rates across the board. Furthermore,
broad country-based studies, as noted earlier, have reported that the number of
high-growth enterprise is in the range of four to five percent of continuing firms’
population.
The topic of high-growth deserves the attention of entrepreneurship and growth
scholars. As growth is a time-dependent phenomenon and RGEs attain higher growths
in shorter times, they offer a remarkably shorter, and thus richer, potential for
uncovering the puzzle of growth and growing firms. The topic also deserves the special
attention of policy makers as high-growth firms generate employment, income, social
benefits, taxes and wealth at much higher and faster rates than an average growing
firm. However, they may require a special policy environment as their overall benefits
seem to well outweigh the cost of such environments. We suggest that formulaic rule
without due consideration for RGEs’ capacity to create knowledge, generate high
technology and spill-over for other firms, foster change and act as catalyst for other
firms to emulate, cannot well-serve the interest of any of the stake holders concerned.
We suggest that RGEs deserve close attention for their high potentials. However, if our
observation regarding HGEs as under-studied phenomenon is an indication of the
difficulties in examining them, the policy community faces even tougher challenges
than the academic community for creating highly conducive policy environments to
stimulate the growth of potential firms to become RGEs. On the face of it, the a priori
odds are not in favor of typically smaller and younger firms turning into rapid growing
enterprises. The silver lining, however, is in the empirical evidence that these firms
maintain high-growth potentials beyond one or two years, which offer the policy
community the opportunity to improve upon their diagnostic tools and measures to
identify them earlier-on in order to augment their growth with conducive policies.
This study covers a gap in the extant literature of growth pertaining to the
internationalization of smaller firms and thereby contributes to the interaction of the
both fields. However, in-depth case studies and broadly based surveys are necessary
for deeper understanding of high-growth and internationalization as well as the
influential factors, including the internal characteristics of its agents, especially those
of the management. Although this research carries the limitations of using secondary
data, the publicity and prominence associated with the Profit Top 200 lists and the
strict standards of its publisher have instilled a high level of rigor and reliability in the
list over the past two decade that is at least matching, if not exceeding, characteristics
of primary data. Furthermore, the authors’ exercise of extreme prudence, as discussed
earlier, gives this research a high level of reliability and validity.
Notes
1. Internationalization belongs to an extensive literature on the subject and is defined broadly as
a firm conducting a part of its activities beyond its home country. “Forward
internationalization” refers to generation of revenues in international markets; while
“backward internationalization” refers to “out-sourcing” and “off-shoring” from international
sources. For a more extensive definition and analysis of internationalization’s impact on
smaller firms’ competitiveness and growth, see Etemad (2011).
2. In his book, A Blue Print to a Billion: 7 Essentials to Achieve Exponential Growth, Mr
Thompson, a former McKinsey consultant, examined the seven common essentials in a set of
387 “Blueprint companies”. The book chronicled the common processes by which “billion
dollar firms” grew rapidly from an IPO since 1980 and reached $1 billion in revenue by 2005.
The book became available in 2006.
3. Using Bygrave and Minniti’s (2000) terms, entrepreneurial activities expand the society’s
“production possibilities frontier”, which benefits the society as a whole (i.e. is a social
benefit). Naturally, HGEs’ contribution to that expansion is relatively higher than that of
other firms and thus have higher social benefits.
4. The mixed empirical evidence regarding the relationship between size and age and rapid
growth are consistent with the above arguments.
5. It is important to note the fact that high-growth rates are located on the right side of growth
rate distribution and in that sense high-growth enterprises are representing the right-tail of
overall population of continuing firms’ growths.
6. This lists serves as the bench marking baseline for others to emulate. It has become a
de-facto list of young corporate heroes. Many companies on the lists are recognized by the
Chamber of Commerce, relevant industry associations and the government agencies. The
executive of these companies receive top awards for their achievements. As a result of this
attention the process of identifying them for the list has become methodical, rigorous and
transparent.
References
Acemoglu, D. and Johnson, S. (2005), “Unbundling institutions”, Journal of Political Economy,
Vol. 113 No. 5, pp. 949-95.
Acs, Z.J. and Mueller, P. (2007), “Employment effects of business dynamics: mice, gazelles and
elephants”, Small Business Economics, Vol. 30 No. 1, pp. 85-100.
Acs, Z. and Yeung, B. (1999), “Entrepreneurial discovery and the global economy”, Global Focus,
Vol. 11 No. 3, pp. 63-71.
Acs, Z.J., Braunerhjelm, D.B., Audretsch, H. and Carlsson, B. (2009), “The knowledge spillover
theory of entrepreneurship”, Small Business Economics, Vol. 32 No. 1, pp. 15-30.
Rapid growth
585
MD
50,4
586
Aldrich, H. and Martinez, M. (2001), “Many are called, but few are chosen: an evolutionary
perspective for the study of entrepreneurship”, Entrepreneurship: Theory and Practice,
Vol. 25 No. 4, pp. 41-56.
Audertsch, D. and Sanders, M. (2008), “Globalization and rise of the entrepreneurial economy”,
discussion paper no. 08-21, Tjalling Koopmans Research Institute, University of Utrecht,
Utrecht.
Baldwin, J.R. and Gu, W. (2003), “Export-market participation and productivity performance in
Canadian manufacturing”, Canadian Journal of Economics, Vol. 36 No. 3, pp. 634-57.
Barnard, P., Fischer, E., Reuber, R. and Rumball, D. (1998), “Elusive gazelles: finding them and
helping them grow”, summary of a think tank organized by Fulcrum Partners, January.
Barney, J. (1991), “Firm resources and sustained competitive advantage”, Journal of
Management, Vol. 17 No. 1, pp. 99-120.
Birch, D. (1987), Job Creation in America: How Our Smallest Companies Put the Most People to
Work, Free Press, New York, NY.
Birch, D., Haggerty, A. and Parsons, W. (1993), Gazelle Jobs, Cognetics, Boston, MA.
Bordt, M., McVey, J. and Short, A. (2005), “Characteristics of firms that grow from small to
medium size: industrial and geographic distribution of small high-growth firms”, Statistics
Canada, Catalogue No. 880006XIE2005005, Ottawa.
Bougrain, F. and Haudeville, B. (2002), “Innovation, collaboration and SMEs internal research
capacities”, Research Policy, Vol. 31, pp. 735-47.
Breschi, S. and Lissioni, F. (2001), “Knowledge spill over and local innovation system”, Industrial
and Corporate Change, Vol. 10 No. 4, pp. 975-1005.
Brunello, B. and Gambarotto, F. (2007), “Do spatial agglomeration and local labor market
competition affect employer-provided training? Evidence from the UK”, Regional Science
and Urban Economics, Vol. 37 No. 1, pp. 1-21.
Bygrave, W. and Minniti, M. (2000), “The social dynamics of entrepreneurship”,
Entrepreneurship Theory and Practice, Vol. 24 No. 3, pp. 25-36.
Chen, X. and Glen, C. (2004), “On the intricacies of the Chinese guanxi: a process model of guanxi
development”, Asia Pacific Journal of Management, Vol. 21 No. 3, pp. 305-24.
Combes, P. and Duranton, G. (2006), “Labor pooling, labor poaching and spatial clustering”,
Regional Science and Urban Economics, Vol. 36 No. 1, pp. 1-28.
Covin, J. and Slevin, D. (1989), “Strategic management of small firms in hostile and benign
environments”, Strategic Management Journal, Vol. 10 No. 1, pp. 75-87.
D’Aveni, R.A. (1999), Hypercompetition: Managing the Dynamics of Strategic Maneuvering, Free
Press, New York, NY.
Davidsson, P. and Honig, B. (2003), “The role of social and human capital among nascent
entrepreneurs”, Journal of Business Venturing, Vol. 18 No. 3, pp. 301-31.
Davidsson, P., Steffens, P. and Fitzsimmons, J. (2009), “Growing profitable or growing from
profits: putting the cart before the horse”, Journal of Business Venturing, Vol. 24 No. 4,
pp. 388-406.
Dechenaux, E., Goldfarb, B., Shane, S. and Thursby, M. (2003), “Appropriability and the timing
of innovation: evidence from MIT inventions”, working paper 9735, National Bureau of
Economic Research, Cambridge, MA.
Delmar, F., Davidson, P. and Gartner, W.B. (2003), “Arriving at the high-growth firm”, Journal of
Business Venturing, Vol. 18, pp. 189-216.
Dunne, P. and Hughes, A. (1994), “Age, size, growth and survival: UK companies in the 1980s”,
The Journal of Industrial Economics, Vol. 42 No. 2, pp. 115-40.
Etemad, H. (2011), “International growth of smaller firms from emerging economies and
internationalization theories”, in Etemad, H. (Ed.), The Process of Internationalization in
Emerging SMEs and Emerging Economies, Edward Elgar Publishing, Northampton, MA.
Etemad, H. and Keen, C. (2009), “Profiling and modeling high-growth and rapidly
internationalizing enterprises from Canada”, Proceedings of the Annual ASAC
Conference, June 6-9, Niagara Falls.
Feldman, M., Francis, J. and Bercovitz, J. (2005), “Creating a cluster while building a firm:
entrepreneurs and the formation of industrial clusters”, Regional Studies, Vol. 39 No. 1,
pp. 129-41.
Fischer, E. and Reuber, R. (2003), “Support for rapid-growth firms: a comparison of the views of
founders, government policymakers, and private sector resource providers”, Journal of
Small Business Management, Vol. 41 No. 4, pp. 346-65.
Grant, R. (1991), Contemporary Strategic Analysis: Concepts, Techniques, Application, Basil
Blackwell, Cambridge, MA.
Granovetter, M. (1985), “Economic action and social structure: the problem of embeddedness”,
American Journal of Sociology, Vol. 91 No. 3, pp. 481-510.
Gulati, R. (1995), “Does familiarity breed trust? The implications of repeated ties for contractual
choice in alliances”, Academy of Management Review, Vol. 38 No. 1, pp. 85-112.
Gundry, L. and Welch, H. (2001), “The ambitious entrepreneur: high-growth strategies of
women-owned enterprises”, Journal of Business Venturing, Vol. 16 No. 5, pp. 453-70.
Halabisky, D., Dreessen, E. and Parsley, C. (2006), “Growth in firms in Canada, 1985-1999”,
Journal of Small Business and Entrepreneurship, Vol. 19 No. 3, pp. 255-68.
Halabisky, D., Lee, B. and Parsley, C. (2005), Small Business Exporters: A Canadian Profile, Small
Business Policy Branch, Ottawa.
Hallberg, K. (2001), “A market-oriented strategy for small and medium-scale enterprises”,
discussion paper no. 40, World Bank, Washington, DC.
Hoffman, A. and Junge, M. (2006), “Documenting data on high-growth firms and entrepreneurs
across 17 countries”, mimeo, FOR A, Copenhagen.
Huggins, R. (2008), “The evolution of knowledge clusters”, Economic Development Quarterly,
Vol. 22 No. 4, pp. 277-89.
Hymer, S. (1960), The International Operations of National Firms: A Study of Foreign Direct
Investment, MIT Press, Cambridge, MA.
Jack, S.L., Dodd, S.D. and Anderson, A.R. (2004), “Social structures and entrepreneurial networks:
the strength of strong ties”, International Journal of Entrepreneurship and Innovation,
Vol. 5 No. 2, pp. 107-28.
Johansson, B. (2004), “Parsing the menagerie of agglomeration and network externalities”,
CESIS Electronic Working Paper Series No. 2, CESIS (Centre of Excellence for Science and
Innovation Studies), The Royal Institute of Technology, Stockholm, available at: www.
inra.kth.se/cesis/research/workpap.htm (accessed 21 October 2010).
Karlsson, C., Johansson, B. and Stough, R. (2008), “Entrepreneurship and innovation in functional
regions”, CESIS Electronic Working Paper Series No. 144, CESIS (Centre of Excellence for
Science and Innovation Studies), The Royal Institute of Technology, Stockholm.
Karra, N. and Phillips, N. (2004), “Entrepreneurship goes global”, Ivey Business Journal Online, p. A1.
Rapid growth
587
MD
50,4
588
Keen, C. and Etemad, H. (2008), “High-growth and rapidly internationalizing smaller enterprises
from Canada”, 11th McGill International Entrepreneurship Conference, December 15-18,
2008, Dunedin, New Zealand.
Keen, C. and Etemad, H. (2011), “The impact of entrepreneurial capital and rapidly growing
firms: the Canadian example”, International Journal of Entrepreneurship and Small
Business, Vol. 12 No. 3, pp. 273-89.
Knight, G. and Cavusgil, T. (1996), “The born global firm: a challenge to traditional
internationalization theory”, in Cavusgil, S. and Madsen, T. (Eds), Advances in
International Marketing, JAI Press, Greenwich, CT, pp. 11-26.
Knight, G., Madsen, T.K. and Servais, P. (2004), “An inquiry into born-global firms in Europe and
the USA”, International Marketing Review, Vol. 21 No. 6, pp. 645-65.
Kirzner, I. (1973), Competition and Entrepreneurship, University of Chicago, Chicago, IL.
Krugman, P. (1991), “Increasing returns and economic geography”, Journal of Political Economy,
Vol. 99 No. 3, pp. 483-99.
Lotti, F., Santarelli, E. and Vivarelli, M. (2003), “Does Gibrat’s law hold among young, small
firms?”, Journal of Evolutionary Economics, Vol. 14, pp. 213-35.
Lu, J. and Beamish, P. (2001), “The internationalization and performance of SMEs”, Strategic
Management Journal, Vol. 22 Nos 6/7, pp. 565-86.
McDougall, P. and Oviatt, B. (1994), “Toward a theory of international new ventures”, Journal of
International Business Studies, Vol. 25 No. 1, pp. 45-64.
McEvily, B. and Zaheer, A. (1999), “Bridging ties: a source of firm heterogeneity in competitive
capabilities”, Strategic Management Journal, Vol. 20 No. 12, pp. 1133-56.
Maccarini, M., Scabini, P. and Zuchella, A. (2004), “Internationalisation strategies in Italian
district-based firms: theoretical modeling and empirical evidence”, working paper 2004/3,
Facoltà di Economia, Università dell’Insubria, Varese.
Markman, G. and Gartner, W. (2002), “Is extraordinary growth profitable? A study of Inc. 500
high growth companies”, Entrepreneurship Theory and Practice, Vol. 27 No. 1, pp. 65-75.
Marshall, A. (1961), Principles of Economics, An Introductory Volume, 8th ed., Macmillan,
London.
Minniti, M. and Bygrave, W. (1999), “The microfoundations of entrepreneurship”,
Entrepreneurship Theory and Practice, Vol. 23 No. 4, pp. 41-52.
Morena, A.M. and Casillas, J.C. (2007), “High-growth SMEs versus non-high-growth SMEs:
a discriminant analysis”, Entrepreneurship and Regional Development, Vol. 19 No. 1,
pp. 69-88.
Nummela, N., Saarenketo, S. and Puumalainen, K. (2004), “A global mindset-a prerequisite for
successful internationalization?”, Canadian Journal of Administrative Sciences, Vol. 21
No. 1, pp. 51-64.
Parker, S.C., Storey, D.J. and van Witteloostuijn, A. (2005), “What happens to gazelles?
The importance of dynamic management strategy”, research report, Entrepreneurship
Research Series, Centre for Entrepreneurship, Durham Business School, Durham
University, Durham.
Parsley, C. and Halabisky, D. (2008), “Profile of growth firms: a summary of Industry Canada
research”, Industry Canada, Government of Canada, Ottawa, March.
Penrose, E. (1959), The Theory of the Growth of the Firm, Wiley, New York, NY.
Porter, M. (1990), The Competitive Advantage of Nations, Macmillan, London.
Porter, M. (1991), “Towards a dynamic theory of strategy”, Strategic Management Journal,
Vol. 12 No. 2, pp. 95-117.
Porter, M. (1998), “Cluster and the new economics of competition”, Harvard Business Review,
Vol. 90 No. 2, pp. 73-93.
Pouder, R. and St John, C. (1996), “Hot spots and blind spots: geographical clusters of firms and
innovation”, The Academy of Management Review, Vol. 21 No. 4, pp. 1192-225.
Rennie, M. (1993), “Global competitiveness: born global”, The McKinsey Quarterly, Vol. 4,
pp. 45-52.
Robinson, K.C. and Hofer, C.W. (1954), A Methodological Investigation of the Validity and
Usefulness of Parametric and Nonparametric Statistical Data Analysis Techniques for New
Venture Research, Babson College Press, Wellesley, MA, pp. 143-705, Frontiers of
Entrepreneurship.
Robson, G., Gallagher, C. and Daly, M. (1993), “Diversification strategy and practice in small
firms”, International Small Business Journal, Vol. 11 No. 2, pp. 31-40.
Rothwell, R. and Dodgson, M. (2007), “External linkages and innovation in small and
medium-sized enterprises”, R&D Management, Vol. 21 No. 2, pp. 125-38.
Schreyer, P. (2000), “High-growth firms and employment”, OECD Science, Technology and
Industry working papers 2000/3, OECD Publishing, Paris.
Schumpeter, J. (1934), The Theory of Economic Development, Harvard University Press, Boston,
MA.
Scitovsky, T. (1954), “Two concepts of external economies”, Journal of Political Economy, Vol. 62,
pp. 143-51.
Shane, S. and Venkataramen, S. (2000), “The promise of entrepreneurship as a field of research”,
Academy of Management Review, Vol. 25 No. 1, pp. 217-26.
Shepherd, D. and Wiklund, J. (2009), “Are we comparing apples with apples or apples with
oranges? Appropriateness of knowledge accumulation of growth studies”,
Entrepreneurship Theory and Practice, Vol. 33 No. 1, pp. 105-23.
Shirley, M. (2005), “Institutions and development”, in Menard, C. and Shirley, M. (Eds), Handbook
of New Institutional Economics, Springer, Dordrecht, pp. 611-38.
Siegel, S. (1956), Nonparametric Statistics for the Behavioral Sciences, McGraw-Hill, New York,
NY.
Thomson, D. (2005), Blueprint to a Billion: 7 Essentials to Achieve Exponential Growth, Wiley
& Sons, New York, NY.
Torre, A. and Rallett, A. (2005), “Proximity and localization”, Regional Studies, Vol. 1 No. 39,
pp. 1-13.
Upton, N., Teal, E. and Felan, J. (2001), “Strategic and business planning practices of fast growth
family firms”, Journal of Small Business Management, Vol. 39 No. 1, pp. 60-72.
Van Praag, M.C. and Versloot, P.H. (2008), “The economic benefits and costs of entrepreneurship:
a review of the research”, Foundations and Trends in Entrepreneurship Research, Vol. 4
No. 2, pp. 65-154.
Verhees, F. and Meulenberg, M. (2004), “Market orientation, innovativeness, product innovation,
and performance in small firms”, Journal of Small Business Management, Vol. 42,
pp. 134-54.
Weinzimmer, L., Nystrom, P. and Freeman, S. (1998), “Measuring organizational growth: issues,
consequences and guidelines”, Journal of Management, Vol. 24 No. 2, pp. 235-62.
Rapid growth
589
MD
50,4
590
Wernerfelt, B. (1984), “A resource based view of the firm”, Strategic Management Journal, Vol. 5
No. 2, pp. 171-80.
Wiklund, J., Davidsson, P. and Delmar, F. (2003), “What do they think and feel about growth?
An expectancy-value approach to small business managers’ attitudes toward growth”,
Entrepreneurship Theory and Practice, Vol. 27 No. 3, pp. 247-70.
Wiklund, J., Patzelt, H. and Shepherd, D. (2009), “Building an integrative model of small business
growth”, Small Business Economics, Vol. 32 No. 4, pp. 351-74.
Williamson, O. (1975), Markets and Hierarchies: Analysis and Anti-Trust Implications, Free Press,
New York, NY.
Yang, C.-H. and Huang, C.-H. (2005), “R&D, size and firm growth in Taiwan’s electronics
industry”, Business Economics, Vol. 25 No. 5, pp. 477-87.
Further reading
Baldwin, J.R. (1998), “Were small producers the engines of growth in the Canadian
manufacturing sector in the 1980s?”, Small Business Economics, Vol. 10 No. 4, pp. 349-64.
Birch, D.L. and Medoff, J. (1994), “Gazelles”, in Solmon, L.C. and Levenson, A.R. (Eds), Labor
Markets, Employment Policy and Job Creation, Westview, Boulder, CO, pp. 159-67.
Gomes-Casseres, B. (1997), “Alliance strategies of small firms”, Small Business Economics, Vol. 9
No. 1, pp. 33-44.
Makino, S., Isobe, T. and Chan, C. (2004), “Does country matter?”, Strategic Management Journal,
Vol. 25 No. 10, pp. 1027-43.
Corresponding author
Christian Keen can be contacted at: keen@ort.edu.uy
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com
Or visit our web site for further details: www.emeraldinsight.com/reprints