Lumps, Bumps and Jumps in the Firm Growth Process
By Alex Coad, Waseda Business School, Waseda University, Japan, alex.coad@waseda.jp
Abstract
Firm growth is a central topic in entrepreneurship research. The approach taken here is to survey the literature on lumps and discontinuities in the growth process, which may well correspond to the most interesting cases of firm growth. Our interdisciplinary review investigates stages of growth models, growth modes, growth strategies, and barriers and thresholds that hinder the growth of firms. Firm growth is theorized to be characterized by the addition and reconfiguration of lumpy discrete resources. The distribution of annual growth rates follows a heavy-tailed distribution, which has led to interest in growth paths, growth spells, growth spikes, and the phenomenon of High-Growth Firms (HGFs). We conclude with implications for empirical and theoretical research.
Lumps, Bumps and Jumps in the Firm Growth Process
The growth of firms is a central topic in entrepreneurship research and much research has been published on the topic. While there are a number of surveys on the topic of firm growth, these surveys generally focus on the determinants of firm growth where firm growth is generally seen as ‘more of the same’ in the context of a smoothly-expanding continuous variable that represents firm size. Lumps, Bumps and Jumps in the Firm Growth Process seeks to contribute to the literature by taking a different angle to the phenomenon of firm growth – emphasizing the lumpy nature of growth, and focusing specifically on the discontinuities in the growth process. It argues that the most interesting growth events occur during these discontinuous lumps and spikes in the growth process. Lumps, Bumps and Jumps in the Firm Growth Process is multidisciplinary and focuses on various aspects of the growth process. Section 2 focuses on theoretical aspects of lumpy growth. Section 3 focuses on empirical research into the lumpiness of firm growth. Section 4 discusses how empirical research into the characteristics and performance of High-Growth Firms (HGFs) as well as searching for regularities in growth paths, growth autocorrelation patterns, growth spells, and growth spikes. Section 5 discusses some implications of this literature review for empirical analysis and Section 6 concludes.
