Hannu Littunen and Hannu Niittykangas
This paper aims to examine factors influencing the high growth of new firms in metal‐based manufacturing and business service firms in Finland. It seeks to compare the factors of…
Abstract
Purpose
This paper aims to examine factors influencing the high growth of new firms in metal‐based manufacturing and business service firms in Finland. It seeks to compare the factors of how new firms achieve a high rate of growth during the first four years and years five to eight.
Design/methodology/approach
The study reported here is part of a longitudinal research project that has followed the development of 200 SMEs in Finnish metal‐based manufacturing and business services since their start‐up in 1990. At the seven‐year follow‐up the present study concentrates on the 86 surviving firms. Logistic regression analysis was used as statistical technique in locating differences between high‐growth and other firms and their owner‐managers in the selected attributes. This paper focuses on Storey's key elements. In search of potential differences in these characteristics between high‐growth firms and other firms, this study compares Finnish firms in relation to founders' motives in starting up on their own account and in their individual background characteristics, changes in strategic factors, changes in networks and management styles during various stages of entrepreneurship.
Findings
The results indicated firstly that there is a clear connection between entrepreneur's know‐how and the high growth of firms. Secondly, the findings of this study demonstrate that external networks as a management capability bring about great competitive advantage, innovations and efficiency, especially during the first four years. However, the findings of five to eight years of development contradict the findings of the first four years. The results show that the use of internal networks has a positive effect on firms' high growth during years five to eight years. Finally, the results show that industry sector affected high growth, especially in specialised metal industry firms, both during the first four years and after five to eight years of development.
Research limitations/implications
The implications of this study for academics, educational institutions, entrepreneurs, and other practitioners are that the so‐called support services of internationalisation and growth for new firms are most important. These support services could be developed with public sector assistance in areas such as financing research, innovation and information technology projects.
Orginiality/value
The paper provides a framework for testing the factors that differentiate growing new ventures during various stages of entrepreneurship.
Details
Keywords
Mauri Laukkanen and Erno T. Tornikoski
The purpose of this paper is twofold: first, using the case of Finnish small business advisors (SBAs), it aims to clarify a controversy in entrepreneurship policy about using…
Abstract
Purpose
The purpose of this paper is twofold: first, using the case of Finnish small business advisors (SBAs), it aims to clarify a controversy in entrepreneurship policy about using public funds to foster solo and micro entrepreneurship. The study reveals the SBAs’ belief systems to facilitate policy-relevant conclusions about their advisory competence, counseling tendencies and probable impact on nascent entrepreneurs and macro consequences like firm displacement. Second, methodologically, the study’s cognitive perspective and method enable researchers to assess the approach and its potential.
Design/methodology/approach
The SBAs’ (n=15) belief systems were elicited by interview-based causal mapping. They are summarized using aggregated causal maps and analyzed to understand the SBAs’ dominant mindset and to draw conditional inferences about their professional competence and impacts.
Findings
The SBAs have convergent belief systems about the causes and consequences of micro entrepreneurship. They are generally competent to detect and foster viable solo and small micro firms. From a policy viewpoint, however, they ignore indirect effects like firm replication and appear risk aversive, less inclined to promote their clients’ growth intentions and plans.
Originality/value
For entrepreneurship policy makers, the study clarifies a controversial issue. It finds clear grounds for public funding of SBA type services, but this may depend on policy goals and local conditions. For the SBAs, the study suggests proactive, income-generating services for improved financing and legitimacy. For entrepreneurship researchers, it demonstrates the potential and limits of the cognitive approach and causal mapping.
Details
Keywords
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…
Abstract
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.