A Multivariate Analysis of the Characteristics of Rapid Growth Firms, Their Leaders, and Their Market

Abstract

Rapid growth small and medium-sized enterprises (SMEs) serve as a role model for many founders and managers. However, rapid growth is difficult to attain. A large number of studies that analyse rapid growth SMEs are based on bivariate comparisons of rapid growth firms and normal growth firms. However, bivariate analyses may suffer from an inflation of the experimentwise error rate, the neglect of possible interdependencies between the independent test variables, and the fact that population effects may be obscured by opposing effects in subpopulations. Moreover, definitions of rapid growth vary from study to study, which may impact on the results. This analysis adds to research on rapid growth firms by contrasting bivariate and multivariate approaches and by analyzing the impact of varying definitions of rapid growth on a sample of 225 rapidgrowth and normal-growth firms from Germany's Entrepreneur of the Year Competition. The results show that attributes of rapid growth firms include a low degree of experience of the founder and cost leadership in the total market. This analysis also shows that the results of the analyses differ significantly depending on the analytical method chosen.