Product—Market Choices and Growth of New Businesses

Abstract

The relationship between product–market strategies and the growth of new firms is incompletely understood. The lack of understanding reflects the absence of a conceptual framework that would explain why certain product–market strategies achieve specified goals more effectively than do others. Prior research links product and market strategy to business growth, but does not clearly separate product line choices from market choices, and provides little guidance with respect to the sequence in which product and market changes should be made. Richard Cardozo, Karen McLaughlin, Brian Harmon, Paul Reynolds, and Brenda Miller propose a “wave” model of product–market choice, which yields hypotheses they evaluate with data from a subsample of 120 firms drawn from a representative sample of new businesses. Results yield preliminary guidelines for product–market strategy for managers of fledgling businesses.