Firm Growth Research Articles

Appeasing Stockholders at the Expense of Stakeholders: Do Contingencies Matter?

ABSTRACTIn this study, we investigate whether dividend growth is associated with both sustainability reporting and assurance. In doing so, we aim to highlight whether appeasing stockholders more may damage stakeholder communication or not. Besides, we explore whether firm growth opportunity, free cash flow and firm risk moderate between dividend growth and sustainability reporting and assurance. We hope to shed light on firm strategies balancing the stockholders' and stakeholders' interests concurrently. We fetched the data for the period between 2002 and 2019 and ran country‐industry‐year fixed‐effects logistic regression. The findings indicate that dividend growth diminishes the likelihood of disseminating a sustainability report and assuring the sustainability report; however, this significant link is validated in the recent period (i.e., 2011–2019) rather than the earlier period (i.e., 2002–2010). Furthermore, while firms paying greater dividends with higher growth opportunities avoid assurance practice only, risky firms avoid both sustainability reporting and report assurance. Contrary to expectations, free cash flow does not significantly influence sustainability reporting and assurance practices of the firms paying greater dividends relative to the prior period. However, further analyses revealed a very significant difference between Anglo‐Saxon versus non‐Anglo‐Saxon countries.

Colonialism in sub-Saharan Africa, access to finance, and firm growth

Colonialism in sub-Saharan Africa, access to finance, and firm growth

Are the business strategies of Korean family firms innovation-oriented?

PurposeThis study investigates the relationship between the business strategies of Korean family firms and firm growth opportunities and corporate value.Design/methodology/approachThis study is based on a quantitative research design and draws on organizational theory and Miles and Snow’s (1978, 2003) business strategy typology. The sample includes family firms listed on the Korean Securities Dealers Automated Quotations (KOSDAQ) from 2011 to 2019. The results are analyzed using multivariate analysis.FindingsThe results show that Korean family businesses with more innovative prospector business strategies tend to have stronger management capacity to capitalize on their growth opportunities and enhance their market value.Research limitations/implicationsThe findings challenge the common perception that family ownership is inherently less innovative and more focused on defensive strategies driven by private profit extraction through family control. The findings bridge the gap between the predictions of the family control perspective and agency theory, and support the findings of Gerulaitiene et al. (2024) that having more family members involved in the business leads to better innovation outcomes.Originality/valueApproximately 70% of Korean firms are family-founded and tend to be more hierarchical and patriarchal as compared to their counterparts in the US and Europe. These unique features provide an ideal setting to better understand strategic behaviors of Korean family firms and to test the study hypotheses.

Gordon H. Boyce, A History of British Tramp Shipping, 1870 - 1914, Volume 1: Entry, Enterprise, Formation and Early Firm Growth

Gordon H. Boyce, A History of British Tramp Shipping, 1870 - 1914, Volume 1: Entry, Enterprise, Formation and Early Firm Growth

The R&D risk-return trade-off: exploring the diversity of young innovative firms

ABSTRACT Previous studies have established that young innovative companies (YICs), characterized by high levels of in-house research and development (R&D), exhibit a pronounced growth premium at the upper end of the conditional growth distribution and are therefore of particular interest to policymakers. We argue that the binary view underlying this literature – i.e. the R&D vs. non-innovator dichotomy – can be meaningfully extended to provide a better understanding of the relationship between innovation and growth in young firms. To this end, this paper develops an augmented YIC categorization that includes non-R&D innovators and young firms that conduct R&D but have not yet brought an innovation to the market. Using panel data from Germany, we examine the growth trajectories of these different types of YICs. Our evidence suggests that non-R&D-oriented YICs, typically focused on the ‘Learning by Doing, Using, and Interacting’ (DUI) mode of innovation, exhibit a distinct growth pattern. They show improved economic performance relative to non-innovators, though less so than R&D innovators, while growing in a less risky and costly manner. A young firm's decision to engage in R&D for innovation and growth can, therefore, be understood as a specific risk-return trade-off. The paper concludes with implications for policy and further research.

Firms’ subjective political uncertainty: survey evidence of Egypt’s Arab Spring

ABSTRACT Exploiting a unique data set containing information on Egyptian firms’subjective beliefs, characteristics and performance, we study the relationship between subjective political uncertainty and firm growth. Using ordered probit regressions and time-industry-location fixed effects to overcome potential problems of endogeneity, we find that perception of political uncertainty reflects change in real sales growth. Firms perceive political uncertainty more when they realize change, either good or bad.

Modelling the non-linear effects of ownership structure on total productivity growth of firms: a threshold panel regression and Malmquist approach

PurposeThis study aims to assess the non-linear effects of state and major shareholder ownership on the total productivity (TFP) growth of 36 companies listed on Iran’s Stock Exchange over the period from 2017 to 2023.Design/methodology/approachThe Malmquist index was employed to estimate TFP growth, which it dicomposed into two components: efficiency and technical change. Subsequently, the state and major shareholder ownership effects on TFP growth were evaluated using a threshold panel regression approach.FindingsThe results revealed that the TFP growth was 0.3%. Efficiency change contributed positively with a growth rate of 1.9%, while technical change exhibited a negative growth rate of 1.6%. The growth rate of net efficiency change was 2.3% which is the main driver of efficiency improvement, whereas growth rate of scale efficiency was −0.4%. The threshold panel regression results indicated that both state and major shareholder ownership a have negative and non-linear effect on TFP growth. The state ownership threshold level is 16.9%. When state ownership is below this threshold, its effect on TFP growth is more pronounced than when ownership exceeds this level. Similarly, the major shareholder ownership threshold level is 62%, suggesting that the negative effect on TFP growth is less than when major shareholder ownership is below this level.Social implicationsResearchers can use the Global Malmquist-Luenberger Productivity Index to assess environmental productivity.Originality/valueThe study contributes to find state and major shareholder threshold level by using threshold panel regression approach.

A matching algorithm for integrating PATSTAT patent data with Datastream financial data

ABSTRACT The integration of patent data into finance and economics research has recently gained momentum, driven by the strong link between firm innovation, firm growth and economic development. However, utilizing patent data in research poses challenges, notably in matching them with financial identifiers. This is in large part, due to measurement errors, systematic biases and a time-consuming procedure. Accordingly, in this technical note, we introduce a multiple-stage algorithm designed to overcome these obstacles by matching patent data from the extensive PATSTAT database with financial information from Datastream, a widely used accounting database. Our matching algorithm successfully matched 1,851,612 patent applications of 11,371 companies from 44 countries over a 21-year period. We offer a standardized set of rules for similar matching exercises and record the ex post validity of our matching exercise. Our matching algorithm serves as the foundation for international research aimed at exploring the correlation between financial markets and a company’s innovation performance.

Financial development and firm growth: the role of proactivity of provincial leadership

ABSTRACT This study analyzes financial development and firm growth: the role of proactivity of provincial leadership. The model employed in the paper is the Spatial Durbin Model for testing hypotheses from the Vietnamese Enterprise Survey in the period 2005 – 2018, annually conducted by the General Statistics Office of Vietnam. The results show a spatial interaction for firm growth across localities and that financial development has no significant effect on firm growth in provinces. However, the proactivity of provincial leadership in regulating financial development in a province is crucial to firm growth in that province and neighbouring provinces. Furthermore, business support services to access finance in a province have a positive role in promoting firm growth in that province and the region as a whole province. It has contributed to redefining how enabling financial development drives firm growth in emerging markets like Vietnam.

ESG performance drivers and corporate growth: a life-cycle-based fsQCA–PSM study of China’s construction and manufacturing enterprises

ABSTRACT This study adopts a multi-perspective TOE framework and integrates Necessary Condition Analysis (NCA), fuzzy-set Qualitative Comparative Analysis (fsQCA), and Propensity Score Matching (PSM) to investigate how technological, organizational, and environmental factors jointly influence ESG performance and firm growth. Using a sample of construction and manufacturing firms in China, we find: (1) ESG improvements result from the synergy of multiple factors. Four causal paths are identified: H1a (digital transformation + R&D investment + marginal firm size), H1b (digital transformation + financial performance + government subsidies + marginal industry competition), H2 (R&D investment + financial performance + marginal firm size), and H3 (financial performance + industry competition). These form three configuration types: internal–external collaboration, proactive development, and self-reliance under external pressure. (2) The configurations display causal asymmetry, with a single-factor-driven model linked to poor ESG outcomes. (3) The impact on growth varies: the self-reliance model consistently promotes growth; the other two hinder it during early stages but enhance it in maturity. In the decline phase, only internal–external collaboration remains effective. This research advances ESG understanding and informs strategies for enterprise growth.

Does corporate governance and political connections influence the potential for financial statement fraud?

The aim of this research is to analyze the influence of corporate governance and political connections on the potential for financial statement fraud in extractive industry companies listed on the IDX for the 2018-2023 period. The sampling was performed using the purposive sampling method. A logistic regression analysis was performed. The results of this research indicate that corporate governance proxied by the frequency of audit committee meetings, managerial ownership, and related party transactions has a positive effect on the potential for financial statement fraud, while the size of the board of directors has no effect. Political connections proxied by government ownership and politically connected boards negatively affect the potential for financial statement fraud. The addition of control variables, namely firm growth, has a positive effect on the potential for financial statement fraud, whereas firm size has no effect.

Firm-specific and macroeconomic determinants of share pricing of listed firms in Nigeria

Investors are generally concerned about the share prices of listed firms as they depict the risk-return characteristics of their investments. The study examined firm-specific and macro-economic determinants of share pricing of listed firms in Nigeria. The study focused the listed consumer goods firms and data which were extracted from the audited annual report of eighteen (18) firms from 2010 to 2022. Macro-economic data were also obtained from World Bank Database and the Central Bank of Nigeria statistical bulletin. Two-step System Generalized Method of Moments (GMM) was used to analyze the data. Findings showed positive effects of dividend payout and leverage, on share prices at 1% and 5% significant levels respectively. Return on assets and firm growth was found to have had negative, effect on share prices at 1% and 10% significant level, respectively. Also, money supply had negative effect at 1% significant level, while crude oil price had positive effect at 10% significant level. The result further showed that political event had negative effect on share prices at 1% significant level. The study concluded that firm-specific factors and macro-economic variables significantly influence share prices of listed consumer goods firms in Nigeria. The study recommended that potentials investors should monitor the movement of dividend payout, leverage, and return on asset, firm growth, money supply and crude oil price when making investment decision in the sector.

How organizational resilience affects firm growth: the perspective from organizational strategy

PurposeThis study investigates how organizational resilience (OR) might affect firm growth, the mediating effect of mergers and acquisitions (M&As) strategy and divestitures strategy, and the moderating effect of environmental uncertainty.Design/methodology/approachThis study establishes a moderated mediation model and verifies the model using data of listed Chinese manufacturing companies from 2012 to 2022.FindingsThe results disclose that OR can indeed enhance firm growth. The enhanced firm growth can be achieved by promoting M&As strategy and inhibiting divestitures strategy. Environmental uncertainty positively moderates the positive correlation of OR on firm growth through the mediating effect of M&As strategy and divestitures strategy.Originality/valueDrawing on conservation of resources (COR) theory, this paper examines OR and firm growth. These findings provide guidelines for enterprises aiming to achieve long-term growth by paying attention to the shaping of enterprise’s endogenous ability, making relevant strategies adjustments under highly volatile environments.

Firm growth and the job satisfaction of the startup workforce

Abstract Research SummaryThis study investigates how sales and employment growth shape employee job satisfaction in startups. Grounded in Penrosean growth theory and related literature, we propose an inverted U‐shaped relationship, where excessive growth triggers the “Penrose Effect” and impairs employee job satisfaction. Analysis of multilevel Glassdoor.com data reveals modest support for this relationship in employment growth, which is stronger for firms undergoing rapid workforce expansion. Exploratory text analysis further suggests that rapid employment growth exposes socio‐structural challenges, and rapid sales growth reveals managerial deficiencies in the scaling of revenues. The differences between these mediating mechanisms suggest that the Penrose effect may be less binding than previously theorized, warranting further scrutiny. Our findings bridge macro‐level growth dynamics with micro‐level employee experiences, providing insights into the contemporary challenges of rapidly growing firms.Managerial SummaryDoes startup growth enhance the employee work experience? If so, is it bound by the rate of growth? Our study offers insights into these questions by combining Glassdoor.com reviews with startup financial data and reveals that moderate levels of growth can enhance employee job satisfaction, while rapid expansion can undermine it. We identify two key mechanisms: first, rapid employment growth strains workplace dynamics, creating challenges with diversity, inclusion, and team cohesion. Second, rapid sales growth exposes management's limitations in scaling products and services effectively. For startup leaders, these findings shed light on how the tradeoffs of accelerated growth can cascade into employee‐level challenges that impair job satisfaction.

Decoding the nexus: Finance availability and firm growth in the wake of COVID‐19

Abstract MotivationThis article examines the relationship between access to finance and financial constraint to growth in sales and production for Micro, Small, and Medium Enterprises in Iran. MSMEs are critical to economic development, and understanding the financial barriers they face is essential, particularly in the context of an economy like Iran's.PurposeOur study aims to explore how external financing and financial constraints affect firm growth. Specifically, it investigates whether access to finance supports growth and how obstacles in obtaining finance may hinder sales and production expansion.Approach and MethodsOur study is based on data from 486 enterprises across five provinces. We analyzed the impact of access to finance on firm growth during the COVID‐19 pandemic using Probit models and Marginal Plots. The analysis also considers firm‐level factors such as access to technology, owner education, new employment, bankruptcy experience, and labor adjustment.FindingsThe study demonstrates that external financing is positively associated with the growth of firms, while the obstacles they face in accessing external financing exert a negative and significant impact on firm growth. The results also indicate that access to technology, owner education, and new employment are positively related to the growth of firms. On the other hand, the experience of bankruptcy and labor adjustment has a negative and significant impact on the sales and production growth of firms.Policy ImplicationsThese findings highlight the importance of improving access to finance for MSMEs and minimizing barriers to external funding. Policies that support technology adoption, education, and employment—especially during crises such as COVID‐19—can help mitigate negative impacts and promote sustained firm growth.

Capability morphology and firm growth in middle-income economies: evidence from Kosovo’s manufacturing sector

ABSTRACT This paper examines how internal capability structures drive firm performance among manufacturing firms in Kosovo. Using Partial Least Squares Structural Equation Modelling (PLS-SEM) on survey data from 101 firms, we show that production, organisational, and management capabilities form a layered morphology crucial to firm growth. Contrary to conventional assumptions, investments in machinery and equipment do not directly improve performance unless embedded within broader capability development. The findings highlight the primacy of absorptive learning, organisational adaptation, and structured management practices in shaping firm success in post-socialist and emerging economies. These results offer theoretical and practical insights into the capability-building strategies necessary for sustainable industrial upgrading.

Seeking More Sustainable Merger and Acquisition Growth Strategies: A Spatial Analysis of U.S. Hospital Network Dispersion and Customer Satisfaction

The pursuit of mergers and acquisitions (M&A) is often an acclaimed strategy for firm growth, resource sharing, and extended reach into new market segments. However, in the healthcare marketplace, there are two very different perspectives related to M&A. On the one hand, the American Hospital Association commends M&A activity as a tool to reduce healthcare costs, drive quality, and serve rural markets. On the other hand, a recent United States’ Presidential executive order suggests that M&A in the healthcare space is harmful to healthcare due to its restrictions on competition and adverse impacts on patients. These conflicting perspectives reflect differing M&A views in mainstream management research, as well. The purpose of the current study is twofold. First, we aim to explore these two seemingly paradoxical perspectives by examining the degree of hospital network geographic dispersion that results from M&A activity. Second, we contribute to the broader M&A literature by drawing attention to the importance of considering geographic influences on M&A performance. Using a spatial analysis of 147 nationwide hospital networks comprising 1713 hospitals, we propose and find support for the notion that the degree of network dispersion, as measured by actual driving distances in healthcare networks, are correlated with patient experiences. Using ordinary least squares (OLS) regression to examine relationships between patient experiences and overall hospital network geographic dispersion, we found support for the hypothesis that more spatially dispersed healthcare networks are associated with lower overall performance outcomes, as measured by customer (patient) satisfaction. The implications of these findings suggest that growth strategies that involve M&A activity should carefully consider the spatial influences on M&A entity selection. Our exploratory findings also provide a foundation for future research to bridge the gap between industry and governmental perspectives on healthcare M&A practices.

Moderating Effect of Debt Literacy on the Link between Debt Management Behaviour and SME Growth Sustainability

Small and Medium-sized Enterprises (SMEs) play a crucial role in the economic development of emerging economies; however, their growth is frequently obstructed by financial mismanagement and insufficient debt literacy. This research examines how debt literacy influences the relationship between debt management practices and the sustainability of growth in SMEs located in Lira City, Uganda. This study assesses the interaction between behavioural traits—such as lifestyle patterns, religiosity, and financial self-efficacy—and dimensions of debt literacy (debt knowledge and debt skills) in relation to firm growth. A cross-sectional quantitative design was utilized, and data were gathered from 311 SMEs through a structured questionnaire. Structural Equation Modelling (SEM) utilizing a bootstrap approach was applied to examine direct and moderating effects. The findings indicate that lifestyle patterns substantially impede the growth of SMEs, whereas financial self-efficacy and religiosity do not exert direct effects. Both traits positively influenced debt literacy, which was identified as a significant mediating factor. Debt literacy served as a partial mediator in the relationship between behavioural traits and firm growth, underscoring its significance in converting behavioural dispositions into sustainable financial results. The results substantiate the relevance of the Theory of Planned Behaviour, Sustainable Growth Theory, and Financial Capability Theory in elucidating SME performance. This study enhances theoretical understanding and informs policy development by illustrating the importance of debt literacy for effective financial behaviour. The integration of debt literacy into national SME support frameworks and financial training initiatives, customized to the behavioural profiles of entrepreneurs in developing economies, is recommended

Digital Empowerment of MSMEs: Implications of Digital Loans on Business Sustainability Through Selective Credit Schemes

Digitalization in the financial sector has significantly transformed how banking institutions provide services to Micro, Small, and Medium Enterprises (MSMEs). One of the key innovations is the development of digital loans aimed at accelerating access to capital and promoting business sustainability among MSMEs.This study examines how the selective growth credit distribution program mediated the development of the digital loan model for digital financing and the MSMEs' business sustainability model at Bank BNI in Garut Regency. The rapid growth of digital loans offers MSMEs entrepreneurs’ additional capital, which may accelerate firm growth, but the consequences for business sustainability require more study. This quantitative survey study examines MSMEs that employed BNI's Flexi digital loan under the chosen growth credit distribution scheme. Structural Equation Modelling (SEM) and LISREL software will be used to evaluate the path model linking digital loan use, selective growth credit distribution programs, and MSMEs business sustainability. This study determined the moderating effects of selective growth credit distribution variables (R2=0.715), digital loan resilience (R2=0.731), MSME credit performance (R2=0.625), and server-based product development competency (R2=0.546) as significant factors influencing the business sustainability of MSMEs using Flexi Application at Bank BNI, Garut Regency.

Determinants of Growth and Sustainable Development of Indian Firms

The irresolute studies on pattern of ownership and its bearing on the profitability, sustainable development and growth of firms has made it pertinent to delve deeper into the learnings about the determinants of ownership impacting the growth and sustainable development of Indian firms. Firms are characterized by a network of associations for financing, capital structure, managerial ownership, and compensation. Business antiquity indicates that while these relationships often involve conflicts and differing opinions, nearly all parties align with the all-encompassing goal of achieving the robust business performance. Prior research has explored the associations among different parties within a firm and their impact on performance through the lens of agency philosophy. However, the results from these studies remain inconclusive due to disparities in how ownership and performance are measured. A comparative sample of companies from the four key industry classifications was taken for this study to catch the various determinants of ownership pattern thereby affecting their sustainability. Ownership was captivated taking foreign ownership, director ownership, institutional investors, Indian and foreign promoters. The results showed that good financial performance, women directors’ shareholding, dual structure of leadership and grander boards have an optimistic impact thus impacting sustainable development and growth of Indian firms.Copyright© 2025 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.