SCALE BARRIERS AND GROWTH OPPORTUNITIES: A RESOURCE-BASED MODEL OF NEW VENTURE EXPANSION

Lois M. Shelton
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Lois M. Shelton: Chapman University, Argyros School of Business and Economics, USA

Journal of Enterprising Culture (JEC), 2005, vol. 13, issue 04, 333-357

Abstract: The concept of scale barriers is introduced to shed light on new venture growth. Growth is a process of overcoming resource deficiencies, or scale barriers, resulting from the liabilities of newness and smallness. New ventures employ a variety of resource accumulation strategies to surmount three types of barriers - competitive deficiencies, management and organizational deficiencies, and financial deficiencies. A theoretical model shows how environmental munificence and industry conditions influence barrier size while resource accumulation strategies and initial venture endowments determine a venture's ability to overcome these barriers. The difficulties of growth are illustrated as an extension of the difficulties of survival.

Date: 2005
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DOI: 10.1142/S0218495805000197

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