Academic journal article Journal of Small Business Management

Support for Rapid-Growth Firms: A Comparison of the Views of Founders, Government Policymakers, and Private Sector Resource Providers

Academic journal article Journal of Small Business Management

Support for Rapid-Growth Firms: A Comparison of the Views of Founders, Government Policymakers, and Private Sector Resource Providers

Article excerpt

The paper contrasts the perspectives of firm owners, government policy advisers, and external resource providers on how rapid-growth firms should be supported. Qualitative data were analyzed to identify similarities and differences in groups 'perspectives. The research indicates that each group sees its roles as critical. Policymakers and external resources providers have incentives to interact with rapid-growth firms. Rapid-growth firms have incentives to obtain advice from government sources and external resource providers but prefer to obtain advice from their peers. These findings suggest a network-based approach to the support of rapid growth that is consistent with a new Ontario-based program, the Innovators Alliance.

Introduction

Firms that grow very rapidly, often defined as those having a sales growth rate of at least 20 percent per year for five consecutive years (1), are a phenomenon that is attracting considerable and growing interest from the public sector. Mirroring interest in the business media, such as the publication of the annual Inc. 100 list of America's fastest growing firms and the corresponding Profit 100 list of Canadian firms, governments are allocating resources to studies of the characteristics of rapid-growth firms, for example, in the United Kingdom (Department of Trade and Industry 1994; Storey 1996), the European Community (Birley et al. 1995), and Canada (Baldwin 1994; Johnson, Baldwin, and Hinchley 1997). While rapid-growth firms can provide high returns for investors and can become lucrative clients of consultants and banks, governments tend to focus on their value as job creators. David Birch (1987, 1995), who coined the term "gazelles" to refer to firms in the highest growth percentiles and argued that they play a disproportionate contribution to job creation, was awarded the first Nutek Prize, a Swedish "baby Nobel Prize," recognizing research in the field of small business and entrepreneurship (Hopkins 1997).

Although their impact on job creation has put rapid-growth firms on the public policy agenda, a key question has yet to be answered. It concerns the most effective role of government in supporting rapid growth. Indeed, the more general question is whether governments should be involved in supporting private enterprise at all. One school of thought advocates a relatively passive role of government: to create an overall environment that is supportive of new business development but without providing specialized assistance to selected industries or firms (for example, Levie 1994; Lohmann 1998). Another school of thought advocates a more active role involving the development of specialized policies and programs that allow new and small firms to overcome systematic disadvantages in the market (for example, Levy 1994; Hallberg 1999; Collinson 2000).

Given the growth over the past two decades in many countries of a specialized industry, often involving public sector entities, to proffer advice to new and small firms [see, for example, studies by Bennett and Robson (1999) and Gibson (1997), as well as websites maintained by the United States Small Business Administration (http://www.sbaonline.sba.gov) and by Industry Canada (http://strategis. ic.gc.ca)], it can be assumed that this more active role is the one more often preferred by policymakers. The general propensity to establish policies and programs, together with the keen interest in supporting rapid growth in particular and the emerging recognition that effective policies and programs need to be customized to segments within the population of small and new firms (Delmar and Davidsson 1998; Reuber and Fischer 1999; Chell and Baines 2000), underscores the importance of answering the question: How, if at an, can governments support rapid-growth firms effectively?

In order to address this question, we used a grounded theory approach (Glaser and Strauss 1967; Strauss and Corbin 1998) that was informed by a sensitivity to the multiple yet interrelated ways that different groups might have constructed their understanding of the phenomenon socially constructed (cf. …

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