Birth and growth in new metal‐based manufacturing and business service firms in Finland

This study examined factors influencing the growth of new firms in metal‐based manufacturing and business services in Finland over the three first years of their operation. The factors affecting the growth of a new firm were found in the start‐up phase, in the characteristics of the entrepreneur and of the firm, and in the firm’s environment. Growth was especially explained by the know‐how and changes in the strategic behaviour of the entrepreneur and by the firm’s environment. New firmshad equal chances for growth irrespective of their locality. Instead, growth was affected by changes in a firm’s competitive situation, and, especially in the more developed service centres, growth was dependent on a firm’s expanding its market area in the first three years of operation. The results also clearly indicated that in a small specialist firm personal relationships formed an important part of the entrepreneur’s management capabilities.