Governmental origin: why NTBFs grow in a transitional economy

Sanam Farnoodi,Sepehr Ghazinoory,Reza Radfar,Seyed Habibollah Tabatabaian

doi:10.1080/1331677x.2019.1674173

Abstract

The NTBFs have attracted growing interest from most of the transitional economies as they are seen as an important source of greater value added creation while being characterised with higher rate of return on capital. Shedding light on the growth determinants of new technology-based firms not only helps managers to accomplish organisational goals but also assists policymakers in devising effective strategies. The role of individual, organisational as well as environmental factors in the development of the new technology-based firms has been separately addressed by many researchers. The simultaneity of these factors leads to diverse configurations, each of which envisaging different growth paths for the firm. The aim of this paper is to identify the growth paths for the new technology-based firms. To this end, Some interviews were conducted with the managers of the developed new technology-based firms in Iran (as a transitional economy) and the key themes governing the growth pattern of this group of firms have been identified using the thematic analysis, while possible growth paths for these firms were established by means of qualitative comparative analysis. The designed questionnaires were distributed among 22 developed firms and 8 underdeveloped firms for the period 2013–2015 and the obtained data were analysed using the FSQCA software, which led us to the development of dominant growth path for new technology-based firms. Based on the findings of this paper and factors affecting the growth of firms, two growth paths are suggested for the new technology-based firms, of which the one with greater role for government is more likely to take place. Communication with government officials and lobbying groups in the field of science and technology as the key customer in transitional economies is critical to the corporate growth, which has been identified as a sufficient condition for this research.

Highlights

Most of the developing countries try to change from a centrally planned economy to a market economy
The countries that pave the way for economic liberalisation, where prices are set by market forces are considered the countries with transitional economies where central planning decreases gradually over time (Fischer, Sahay, & Vegh, 1996)
Based on the implementation of privatisation policies and free market mindset, Since 1962, Iran has been implementing policies within the framework of 5year development plans in an effort to foster the role of the private sector in its economy (Daftary, 1973)

Summary

Introduction

Most of the developing countries try to change from a centrally planned economy to a market economy. Based on the implementation of privatisation policies and free market mindset, Since 1962, Iran has been implementing policies within the framework of 5year development plans in an effort to foster the role of the private sector in its economy (Daftary, 1973). This is best exemplified by the development of the ‘third construction plan’ with the adoption of imports substitution and industrialisation approach. After of Washington Consensus and the aftermath of the war was the development of some major economic and social reconstruction plans to improve the performance of state-run firms and provide greater opportunities for a more proactive contribution from the private sector.

Objectives

Methods

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Discussion

Conclusion