Abstract
Achieving high growth that is sustainable is an elusive goal for all but a few great companies. Despite the relative importance of this topic, limited research has been performed to explain this phenomenon, especially in a South African context. This paper adopts an exploratory approach to investigate some of the variables that influence company growth, as well as their choice of strategy. A mixed method incorporating descriptive statistics, regression analysis and qualitative evaluation, was used to test the research questions. A sample of 202 JSE companies indicated 28% were high growth entities, 39% medium growth and 33% achieved growth of less than 10%. A further survey of 30 Chief Executive Officers (CEO) indicated that they believed the top five growth drivers were acquisitions, managerial talent, operational efficiency, an entrepreneurial flair (low growth companies excluded) and the development of networks and partnerships. The respondents, however, ranked the number and importance of these growth drivers very differently with high growth companies citing a broader range of growth drivers than the other respondents. Quite surprisingly, the respondents appear to have underestimated the importance of industry and economy effects. Furthermore, high growth companies appeared to develop a broader spectrum of strategies that were more likely to be linked to their choice of growth driver. Interestingly, high growth companies were the only respondents to develop formal partnership and incentive strategies. In conclusion, the results re-enforce the impression that successful organizations develop a multiplicity of strategies that are always underpinned by operational efficiency.
Highlights
Sustaining business growth is one of the key challenges that business leaders face (McGrath & MacMillan, 2005; Smit, Thompson, & Viguerie, 2005; Zook, 2004; Rijamampianina, Abratt & February, 2003; Gertz & Baptista, 1995)
The proportion of high growth, medium growth and low growth companies is illustrated in Table 1 below
The paper developed a practical conceptual framework that outlined the categories of growth driver and strategy that could influence sustainable growth
Summary
Sustaining business growth is one of the key challenges that business leaders face (McGrath & MacMillan, 2005; Smit, Thompson, & Viguerie, 2005; Zook, 2004; Rijamampianina, Abratt & February, 2003; Gertz & Baptista, 1995). Jeff Immelt has especially raised the critical importance of growth since he has taken over the reins of General Electric from Jack Welch. He told GE’s top managers at an annual meeting in Boca Raton, Florida that: “Another decade of 4% growth and GE will cease to be a great company. Sustainable high growth is the difference between an average company and a great one, yet, the achievement of this phenomenon is arguably one of the most difficult business challenges (Joachimsthaler, 2007; Harvard Management Update, 1996). Gertz and Baptista (1995) report that from 1983 to 1993 only 30% of Fortune 1000 companies managed 10% compound annual growth in revenues. The difficulty of achieving high growth is further underlined by the performance of the Fortune 500
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