The subject of rapid growth firms, often referred to as high growth firms in the European literature (see Delmar et al., 2003) has taken on increasing importance as governments attempt to mobilise this segment of the business population to improve competitiveness and create jobs (Fischer and Reuber, 2003). However, as this paper identifies, rapid firm growth is, first of all, difficult to achieve and, subsequently, difficult to maintain. The aim of this paper is to research the attributes and behaviours needed to achieve and maintain rapid firm growth which, the authors indicate, is a top strategic priority for a large percentage of firms. This latter assumption that growth is a priority for the majority of firms is not universally accepted (Storey, 1994) and it would have been appropriate for the authors to justify such a claim.
To explore attributes and behaviours the authors undertake a significant, 106‐article, literature review and conclude that “contrary to prior beliefs that the literature on firm growth is fragmented or limited”, that it “is rather rich and mature”. This is supported by the collation of the wide ranging material into four influential categories: founder characteristics; firm attributes; business practices; and HRM practices. The degree to which there is cohesion and maturity however, is open to some debate and it would have been informative if the authors had at least acknowledged that other literature, for example Delmar et al. (2003), views the body of work somewhat differently. In particular, there are issues over the definition of rapid growth, the appropriateness of certain growth measures to specific types of business, and the often irregular/erratic development patterns exhibited by growth firms.
To investigate the importance of these identified characteristics a matched sampling technique was employed which enabled comparison between a set of 50 rapid growth firms and a comparison group of 50 slow growth companies. All companies selected had been successful in a particular regional or national entrepreneurship award which had necessitated the submission of a three‐ or four‐page narrative that followed a prescribed format and sufficient financial information to compute a three‐year compound annual sales growth rate. Statistical t‐tests, were undertaken on demographic variables; the number of employees, the three‐year compound annual sales growth rate, the age of the firm and whether the firm was hi‐tech or not to assess the suitability of the matched sample. Those variable considered statistically significant between samples were the compound annual sale growth rate and the size of the firm. While the former becomes the focus of the paper the latter point is not commented upon within the rest of the text. Of those values that are not significant it is worth pointing out the difference that exists between the mean number of employees, 269 in rapid growth firms and 390 in slow growth firms. Consequently the slow growth firms are on average twice as old and almost a third as large as their rapid growth counterparts and both of these characteristics have previously been deemed important in the extant literature (see Storey, 1994). There are others issues of concern within the matching process, for example although it attempts to account for the degree to which each firm is involved with technology, the process does not attempt to resolve any other sectoral bias. In addition, it may also have been interesting to have looked, more closely at the issue of ownership, in particular, the possible existence of portfolio entrepreneurs within either cohort.
The narrative for each case was content analysed using the statistics software package ATLAS/ti using the independent verification of other researchers to increase confidence in the reliability. Subsequently, a one‐tailed, Fischer's exact test was used to test the differences between the frequencies for rapid and slow growth firms. For the most part the findings in this paper replicate previous work (a summary is provided by Storey, 1994, pp. 127, 138, 144). The founders of rapid growth firms are better educated, have a higher incidence of prior industry experience, the firm as a whole is more involved in interorganisational relationships and are more likely to use a growth orientated mission statement than slower growth firms and their business practice will show greater customer awareness. Finally, in terms of HRM practices rapid growth firms are more likely to emphaisize training and employee development than slower growth firms. The new concepts emerging from the research that differentiated between rapid and slow growth firms were in terms of founder characteristics the “entrepreneurial storey” suggesting that “some founders may simply try harder than others” and for business practices “creating a unique value” a concept that refers to the ability of a product or service offering to help customers maximise utility, reduce costs, and/or increase organisational effectiveness in a unique manner. With reference to HRM there was also a suggestion that while both sets of firms were likely to use non‐financial incentives, rapid growth firms had a greater propensity to use financial incentives.
The paper concludes by indicating firstly, that growth is not a random event and that firms that have made a concrete commitment to growth are more likely to achieve rapid growth. Secondly, that the personal characteristics of entrepreneurs who start a firm have a significant impact upon the firm's ability to achieve and maintain a rapid growth rate.
The principle of this paper is timely as the subject of rapid growth firms will come under increasing scrutiny as governments attempt to use the attributes associated with their development to stimulate economies. The methodology employed could also be very useful in providing information on essential differences between rapid and slow growth firms. There are, however, a number of questions which this paper does not effectively address. In the first instance the paper does not discuss the appropriateness of the proxy measure, compound annual sales growth, used to indicate rapid growth or the fact that there is no universally agreed definition of a rapid growth firm in the literature. The lack of an agreed definition would add weight to the suggestion by other authors, for example Delmar et al. (2003) that the literature on rapid growth firms is still fragmented and immature. Secondly, in developing the matched sample a number of aspects have not been fully explored; the age of firm, sector, location and other antecedent factors that could potentially impact upon growth aspirations have not been accounted for in the process. Finally, the paper does not attempt to analyse any change in the patterns of growth rates over time. Given, that the mean age of the slow growth cohort is twice that of the rapid growth cohort (20 years compared to 10 years) and is indicated in the paper as statistically significant, it is possible that the results reflect the influence of age upon business growth. As Storey (1994) suggested there “is an almost unanimous finding in both the United Kingdom and the United States that younger firms grow more rapidly than older firms” (p. 139). This issue is also commentated upon by Delmar et al. (2003) when they state “one neglected issue in the growth literature has been the issue of regularity (or irregularity) of growth over time”. This paper does offer some useful insight into the development of rapid growth firms but these latter points should be dealt with in any future research.
