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Effective growth paths for SMEs Wakkee, Ingrid.

By: Wakkee, Ingrid

Contributor(s): Veen, Marijke Van Der | Eurlings, Willo

Material type: Article

ArticlePublisher: The Journals of Entrepreneurship 2015Description: 169 - 185Online resources: Click here to access online In: The Journal of EntrepreneurshipSummary: How firms grow forms a key question in the research on small and medium-sized enterprises (SMEs). Based on a survey amongst 1,535 SMEs, we show that the presence of growth capability factors, such as, innovation capacity, financing capacity and human capital, offers inadequate explanation for differences in the level of growth between SMEs in a specific period of time. The utilisation of different growth paths however does seem to elucidate differences between low and high growth. Remarkably, we found that growth paths that are most commonly used by SMEs (market penetration and increasing efficiency) hardly lead to growth. Rather growth paths that are infrequently utilised like setting up a new additional venture and entering foreign markets lead to significantly higher growth levels. It seems however that these growth paths are not attainable for SMEs due to the more extensive investments required. Increasing the firms’ brand awareness was found to be the only path to growth that was both used frequently and that yields actual growth. Therefore, investing in this path to growth seems to be a sensible investment choice for SMEs that want to grow.

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Item type	Current location	Call number	Vol info	Status	Date due	Barcode
Articles	Ahmedabad (HO)	(Browse shelf)	Vol. 24, Issue. 2	Available		020415

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How firms grow forms a key question in the research on small and medium-sized enterprises (SMEs). Based on a survey amongst 1,535 SMEs, we show that the presence of growth capability factors, such as, innovation capacity, financing capacity and human capital, offers inadequate explanation for differences in the level of growth between SMEs in a specific period of time. The utilisation of different growth paths however does seem to elucidate differences between low and high growth. Remarkably, we found that growth paths that are most commonly used by SMEs (market penetration and increasing efficiency) hardly lead to growth. Rather growth paths that are infrequently utilised like setting up a new additional venture and entering foreign markets lead to significantly higher growth levels. It seems however that these growth paths are not attainable for SMEs due to the more extensive investments required. Increasing the firms’ brand awareness was found to be the only path to growth that was both used frequently and that yields actual growth. Therefore, investing in this path to growth seems to be a sensible investment choice for SMEs that want to grow.

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