Explanations for business growth (analysing and measuring it) Flashcards
What does SERMES stand for
Social network, evolutionary, RBV, managerial, economic, stochastic
What two approaches form the social network approach
Network and cluster
How could networks improve growth?
social capital opens cheaper access to finance, resources and knowledge
Who are the key stakeholders in network approach
family, other firms, customers, banks
limitations of network?
Difficult to measure its relationship with growth, no empirical link
How could clusters improve growth?
Social capital provides specialist pools of labour, knowledge spillovers and cost savings
limitations of cluster?
No empirical link made
Limitations of population ecology view
Puts too much emphasis on environment rather than entrepreneur, most businesses close rather than grow
Limitations of stage theory
One size fits all, growth is not uniform (spotty), most businesses close rather than grow
Describe Greiner’s (1972) work
5 stage model of business growth where a business faces challenges it must overcome to reach next level of growth
What types of resources does the RBV and learning approach focus on?
Tangible and intangible
What does VRIN stand for
Valuable, rare, imitable, non-substitute
Which of the VRIN variables must decrease for growth to increase?
Imitable
Which of the VRIN variables will increase growth when also increased?
Valuable, rare, non-substitute
Why does VRIN variables increase growth?
The provide competitive advantages to a business and its resources and therefore uniqueness
Limitations of RBV approach
Does VRIN cause growth, or growth cause VRIN?, Difficult to measure if a business has VRIN resources
Name the 3 variants of the managerial approach
Personality traits, managerial style, business orientation
Which two variants of the managerial approach are empirically weak?
Traits and style
limitations of managerial approach
Indirect impact on growth at best, if traits are long-term features, why is short term growth so spotty?
What does the stochastic approach focus on?
entrepreneurial talent
Limitation of stochastic approach
could be talented but still unlucky
Which approach is Porter (2003) associated with?
Social network (cluster)
Limitation of the economic approach
Treats all businesses the same
