Growth Dilemma: When Should Startups Pursue Rapid Growth?

Abstract

Startups face growth dilemma: rapid growth helps startups to gain visibility and legitimacy, while it can also force them to face diseconomies of time compression. We maintain that the nature of the macro-level temporal forces or the speed of time in industries constitutes an important contingency to reconcile the dilemma of startup rapid growth. Results of empirical analysis using 537 US-based startups corroborate the main thesis of this study that startups pursuing rapid growth are more likely to succeed in high-velocity industries, while the opposite is true for startups operating in low-velocity industries.