Dynamic Scaling for Persistent High Growth

Abstract

High-growth firms (HGFs) represent a very small proportion of all firms, yet they are responsible for most new jobs. Previous studies on HGFs, while valuable and advancing the field, have been mostly limited to explaining single three-year episodes of high growth. This leaves a noticeable gap in terms of explaining how firms that show high growth over extended periods of time are able to do so. Using a longitudinal qualitative design to study one of the fastest growing companies in the Netherlands and a persistent fast grower for more than a decade, we identify the process of dynamic scaling as being a key foundation for persistent HGFs. This enables us to demonstrate that what makes high growth sustainable over extended periods of time are the strategic leaders’ consistent and deliberate efforts to scale the organization. We find that strategic leaders are able to repeatedly scale the organization by deploying and adapting four key managerial capabilities that are specific to persistent HGFs. By identifying the process of dynamic scaling and the underlying four key managerial capabilities, we are able to move beyond generic financial and performance indicators of persistent HGFs and, instead, explicate the contextual specificities of these firms, which contribute to their extended success.