Abstract
The starting point of this study is Gibrat's Law, which is contrasted with strategic management. This logic is subsequently applied to a group of remarkably dynamic, high-growth firms: gazelles. Strategic management theory emphasises the importance of firms adjusting strategies in response to changes in the external environment. In our study, it is used to explain several key empirical findings using a novel British data set containing information on more than 100 gazelles. These findings help explain: (1) why Gibrat's Law of random firm growth processes does not generally hold, (2) which strategy and environmental variables have a predictable influence on firm performance and (3) why routine application of 'best practice' strategies is unlikely to foster firm growth in a changing economic environment. In so doing, this paper contributes to the large body of literature on small-firm growth.
| Original language | English |
|---|---|
| Pages (from-to) | 203-226 |
| Number of pages | 24 |
| Journal | Small Business Economics |
| Volume | 35 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 5 Jan 2010 |
| Externally published | Yes |
Funding
Acknowledgements The data used in this research derive from work on Ten Percenters by Deloitte and Touche (D&T). The authors would like to express their appreciation to Peter Morgan, David Wemborn and Tina Hene at D&T who have facilitated and contributed to this research over many years. The considerable contribution of Nick Spencer is also very much appreciated, but the authors alone are responsible for the interpretations provided. Arjen van Witteloostuijn gratefully acknowledges the financial support of the Flemish Science Foundation (FWO).
Keywords
- Firm growth
- Gazelles
- Gibrat's Law
- Strategic management theory
- Strategy variables