The importance of fast growth

Question 1

Define a gazelle

Answer 1

A business with growth rates of over 20% and more than 10 employees

Question 2

List 4 facts of growth

Answer 2

Growth increases survival, fast growth is uncommon, fast growth is spotty, smaller/younger businesses grow faster

Question 3

What did Delmar et al (2013) find?

Answer 3

1% increase in size = 12% decrease in probability of exit

Question 4

What is spotty growth?

Answer 4

Where growth rates change drastically from period to period

Question 5

Why is fast growth uncommon?

Answer 5

Because most business decrease in size rather than increase (study on NZ firms)

Question 6

What does Gibrat’s law state?

Answer 6

Growth is independent of size

Question 7

Does Gibrat’s law hold true for smaller businesses?

Answer 7

No

Question 8

What did Dunne and Hughes (1994) find?

Answer 8

Business age is negatively correlated to growth rates

Question 9

List three benefits of fast growth

Answer 9

Macro economy (Microsoft and google = 13% US GDP in 90’s), regional economies and job generation

Question 10

List some examples of fast growing firms in the 1990’s USA

Answer 10

Microsoft, Google

Question 11

What does MUPPEts stand for

Answer 11

Marginal Undersized Poor Performance Enterprises

Question 12

Who usually sets up muppets?

Answer 12

People of lower economic standing

Question 13

According to Jarillo (1989), what type of resource (and how much more of it) is used by fast growing firms?

Answer 13

External resources (64% more than average use of them)

Question 14

How does the use of external resources aid growth?

Answer 14

Allows the business to pursue opportunities that they wouldn’t have usually been able to do with their own internal, resources and capabilities.