Multi-dimensional or Heterogeneity Entrepreneurial Growth
Question:
Please discuss the different approaches and theories you have been introduced to in this module, with particular emphasis on how these theories / approaches can inform an entrepreneur and help her to manage growth. Reflect on the different growth strategies and growth models and discuss whether there is an ideal-type growth strategy / growth model. Reflect upon the dilemma of growing economies in limited space. What is the role of individual companies in this context?
In Module 1, different approaches and theories had been discussed in relation to entrepreneur’s growth and how he or she would manage firm’s growth by applying these theories and approaches. The module also discussed the influential factors and challenges that an entrepreneur faces in the path of the growth. In the concept multidimensional or heterogeneity entrepreneurial growth, the firms include social civic and cultural factors that help an entrepreneur to maximize his or her businesses (Achtenhagen, Naldi & Melin, 2010). In recent years, multidimensional studies of entrepreneurship have taken an important ground. The entrepreneur considers it as an important activity to create social, civic, economic and community-based entrepreneurial role, which helps the entrepreneur to build a necessary social relationship with the stakeholders (Kreutzer, 2012). The multidimensional view of entrepreneurship can be used to create new knowledge creation for development and development of a knowledge community that helps the entrepreneur to grow extensively (Greiner, 1972).
The Stevenson and Gumpert views provide the rationalities to stay in the familiar zones than to explore the unknown (Stevenson & Gumpert, 1985). He provided the entrepreneurial managerial behaviors in relation to promoters who manage things by seizing an opportunity and trustees who being rigid threatened by the waves of the change (Stevenson & Gumpert, 1985). By challenging the status quo, promoter types of managers invite the changes in the growth of the entrepreneurial businesses. According to their view, the entrepreneur needs to exploit the opportunities at hand. The authors are in support of innovation and creativity of the entrepreneurial traits that would promote to exploit the opportunities at hand and the overall growth of the business (Delmar, Davidsson & Gartner, 2003). According to Edith Penrose’s theory of the growth of the firms, the firms need to have enough resources that would contribute positively to the firm’s growth (Penrose, 1955). She also commented on the challenges and limitations that generally restricts to the growth (Demir, Wennberg & McKelvie, 2016). As stated by her, the entrepreneurs act as the main agent to deal with the resources and services of the firms. He or she should have ambition, versatility, capacity that would be helpful to gather, arrange and utilize information based on judgment. This theory talks about capturing the potential resources that positively contribute to the growth of the firms.
For an example, Jane Cay has established Birdnest, which is online clothing retailing shop. She has used her potential resources such as her talent and advantages of information technology for the growth of her firm. She is versatile, ambitious and resourceful for managing her firm’s growth.
Stevenson and Gumpert Views on Entrepreneurial Managerial Behaviors
Wiklund view presents the modification of Stevenson and Gumpert’s views about the entrepreneurship. His attempt is to reconcile Stevenson and Gumpert’s with the views of Penrose. Wiklund has proposed about the strategy building process that helps in the entrepreneurial actions and decisions (Nason & Wiklund, 2015). The strategies that are proposed by Wiklund helps the entrepreneurs to follow the strategy building process, which also could contribute positively to the growth.
Organic growth and its different mechanisms that promote the organic growth oppose to the concept of merger and acquisitions (Favaro, Meer & Sharma, 2012). Organic growth in entrepreneurship happens naturally by expanding business and customers’ base, increasing output and developing new products. With the help of growth planning, firms are able to capture the organic growth by depending upon the best strategies that are available to them (Barney, 1991). Organic growth is the most natural growing process of business that emphasizes on the decision-making strategy.
Different growth strategies that have been discussed in Module 1 have a huge impression on the minds of the future entrepreneurs, as they might be beneficial by applying various strategies at different times and situations. The challenges that an entrepreneur faces while expanding his or her business generally incorporate two main factors, which is the growth questions and the funding questions by which the fundamental problems of entrepreneur growth can be identified and then mitigated if possible (Naldi & Davidsson, 2014). The appropriate growth models are necessary for an entrepreneur who wants to grow his or her business into new territory and serve new customers. The three broad growth options such as organic growth, franchising and acquisition have their own advantages and disadvantages. An entrepreneur needs to understand the type of the industry where he is doing his business, the availability of funds and measurement of market competition that his or her firm situates.
The organic growth model provides the most natural growth of the business, however; the entrepreneur needs to consider its limitations. The limitations include a restriction on super-fast growth and fundraising would allow a future entrepreneur to be cautious about the limitation. The franchising growth model provides the suitability to the business that offers standardized products (Pettus, 2001). On the other hand, the module also has provided an option that is suitable for the rapid expansion. For rapid growth, an acquisition is the best suitable model. This model in the Module course has provided different growth models that are necessary for an entrepreneur to understand according to his or her nature of the business.
Apart from the models, the course also discussed the necessity of the strategic plans while applying any one of the models. The importance of strategic planning shed lights on the ways of the path that any start-up wants to proceed. It also outlines the measurable goals. According to my opinion, the models and appropriate strategic planning outlines the achievable goals and decides the type of business it wants to proceed. The entrepreneurs of the start-ups could evaluate the challenges and possibility of business to grow. The theories and models provide the appropriate direction to the new entrepreneurs. They could easily determine the suitable areas of the business and nature of their business, which could help them to grow.
Edith Penrose’s Theory on Firm’s Growth
Globalization integrates the different economies across the globe by continuous production of goods and supplying them into different parts of the globe (Sirmon, Hitt & Ireland, 2007). Due to globalization, overall international productivity has grown into a massive dimension. As the economies are growing in a massive nature, the earth’s resources are becoming low. The earth has limited resources and the international growth of the businesses has used this limited resources. Because of this, the resources are diminishing. The role of the individual companies acts on this issue. The individual company should have certain social and environmental responsibility to perform as it has been using earth’s resources for its business purposes (Sirmon, Hitt & Ireland, 2007). The role of the individual company helps the student of Module 1 to understand the corporate social responsibility of a company in the context of the dilemma of the growing economies in limited space. This section is important as this reflects on the responsibilities that need to be fulfilled by the individual company. This reflects on the ethical duties of a company. The students need to know the ethical duties. This would be helpful for them to understand the ethics of sustainability that an organization needs to follow for its sustainable growth.
The role of the individual company in the dilemma of the growing economies in the limited space points out the corporate social responsibility of a company. Apart from this, it also reflects the harmonious relationship of a start-up with its different stakeholders, which would maximize the firm’s potential Favaro, Meer & Sharma, 2012). The individual company should integrate its ethical responsibilities in the day-to-day business strategies and because of this; it would gain a holistic approach that would contribute to the sustainable development.
The way the firms are using earth’s resources they should also balance out the resources and it would be helpful for the firms to achieve the sustainability and growth. They could do business in a steadier manner.
Conclusion
It can be concluded by stating that different approaches and theories that help an entrepreneur to manage growth have been discussed. This has been discussed in module 1. On the other hand, different growth strategies and models have also been reflected. The dilemma in growing economies in limited space and the role of the individual company have also been reflected upon.
References
Achtenhagen, L., Naldi, L., & Melin, L. (2010). “Business growth”—Do practitioners and scholars really talk about the same thing?. Entrepreneurship theory and practice, 34(2), 289-316.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.
Barney, J. B. (2001). Is the resource-based “view” a useful perspective for strategic management research? Yes. Academy of management review, 26(1), 41-56.
Davidsson, P., Achtenhagen, L., & Naldi, L. (2006). What do we know about small firm growth?. In The life cycle of entrepreneurial ventures (pp. 361-398). Springer US.
Delmar, F., Davidsson, P., & Gartner, W. B. (2003). Arriving at the high-growth firm. Journal of business venturing, 18(2), 189-216.
Demir, R., Wennberg, K., & McKelvie, A. (2016). The strategic management of high-growth firms: a review and theoretical conceptualization. Long Range Planning.
Favaro, K., Meer, D., & Sharma, S. (2012). Creating an organic growth machine. Harvard Business Review, 90(5), 96-106.
Greiner, L. E. (1972). Evolution and revolution as organizations grow. Harvard Business Review,50(4), 37-46.
Kreutzer, M. (2012). Selecting the right growth mechanism: The choice between internal development, strategic alliances, and mergers & acquisitions. In Balanced Growth (pp. 77-94). Springer, Berlin, Heidelberg.
Nason, R. S., & Wiklund, J. (2015). An assessment of resource-based theorizing on firm growth and suggestions for the future. Journal of Management, 0149206315610635.
Penrose, E. (1955). Limits to the Growth and Size of Firms. The American Economic Review, 45(2), 531-543.
Pettus, M. L. (2001). The resource-based view as a developmental growth process: Evidence from the deregulated trucking industry. Academy of Management Journal, 44(4), 878-896.
Sirmon, D. G., Hitt, M. A., & Ireland, R. D. (2007). Managing firm resources in dynamic environments to create value: Looking inside the black box. Academy of management review, 32(1), 273-292.
Stevenson, H. H., & Gumpert, D. E. (1985). The heart of entrepreneurship. Harvard Business Review, 63(2), 85-9
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