Towards the Underlying Theories of Small Firm Growth: A Literature Review

Abstract

As a pre-condition for the economic growth of a country, the concept of firm growth has emerged as a critical strategic issue for small businesses from the strategic management perspective. While some literature reviews have been conducted on small firm growth, a comprehensive review of theories emphasizing the association of intangible resources with the growth of small firms has not been conducted. This study aims to provide a literature review of extant theoretical perspectives of small businesses literature. For the review, materials are collected and extracted from various online databases, and results are analysed using classifier variables. Five theories of firm growth, namely, the resource-based theory, knowledge-based theory, dynamic capabilities theory, upper echelon theory and resource-dependency theory, are selected to review, associating the present research aim. The theories are compared using key attributes and outcomes. A clear direction towards an optimum theory to underpin the small firms’ growth has been provided from a resource-management perspective. By validating various theoretical perspectives to explain small business growth, the present study provides first-hand insights for managers to formulate strategies and creates a cornerstone for future empirical studies.