Growth as evidence of firm success: myth or reality?

Niklas Kiviluoto

Entrepreneurship & Regional Development, 2013, vol. 25, issue 7-8, 569-586

Abstract: The purpose of this paper was to explore the widely acknowledged assumption of sales growth being evidence of firm success. Theoretically, the focus is on the existence of entrepreneurial myths, the multidimensionality of growth and the practical and theoretical implications of this. Empirically, the paper relies on both quantitative and qualitative methods to explore facts about sales growth being evidence of firm success. Quantitatively, the convergent validity of sales growth and 14 other performance measures is assessed. This is done both between industries (bio and IT) and firms of different ages (three age categories). The qualitative study explores the perceptions of 23 key stakeholders (entrepreneurs, policy-makers, public investors and venture capitalists) concerning growth, profitability, performance and firm success. Results show that relative sales growth, the most widely used measure of growth, shows no convergent validity to any other performance measure, regardless of industry and regardless of firm age. The stakeholder views complement these findings, and show that sales growth alone tells too little of a complicated phenomenon and hence cannot be considered a measure of firm success. More holistic research approaches are recommended for fully understanding the complexity of firm success.

Date: 2013
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DOI: 10.1080/08985626.2013.814716

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