The Liability of Growth; A Second Critical Period of Liability

Glenn S. Omura and Eric Craymer

presented at the American Marketing AssociationŪs Marketing and Entrepreneurship Conference,

New York, 1995

Introduction

››››››››››› Since its introduction into the literature on firm performance by Stinchcombe (1965), the concept of a žliability of newnessÓ, a period of high mortality shortly after Start-up ( often proposed as one to three years after) has become widely accepted.A majority of growth theorists, while differing in many other aspects, seem to agree on this point (Stinchcombe, 1965; Starbuck, 1965; Kroeger, 1974; Vesper, 1980; Hannan & Freeman, 1985; Timmons, 1990).One thing they all hold in common is the premise, albeit sometimes implicit, that small firms are especially vulnerable in their first several years of existence.

››››››››››› More recently, though , an increasing number of questions have arisen in the literature concerning žthe liability of newnessÓ.Repeated mentions of survival crises later in life suggest that, at a minimum, a second wave of failure, which is perhaps equivalent in severity to start-up failure, occurs during the growth period of the entrepreneurial firmŪs development.There are studies which show empirical evidence of greater severity in a later žadolescentÓ period ( Fichman and Levinthal, 1991; Bruderl and Schussler, 1990) and others which have found empirical proof of an equivalent rise in hazard rate of failure as time proceeds beyond the first several years (Reynolds and Miller, 1987; Reynolds and Miller, 1989) but with older firms failing less due to a lower baseline hazard rate (Amberguey, et al. , 1993).In these and many other publications, authors speak of firms which have passed through the challenges of new venture start-up to become successful and productive only to face an entirely new, but equally serious, test of the ability of the entrepreneur and the firm.

››››››››››› These studies raise serious questions raised as to the existence and comparative severity of žthe liability of newnessÓ. Despite many instances of its mention, few studies have shown any proof of itŪs existence or suggested a plausible mechanism by which it might operate.This paper discusses a study whose purpose is to rectify both of those short-comings.

Growth Models

››››››››››› In this study, we seek an explanation of a second critical period of potential failure that occurs to firms which have already passed the age associated with a "liability of newness" and moved into a period of successful growth.Looking more broadly at the mentions of later in life crisis cited in the Introduction, one could ask what are the common underlying elements that join them into a unique class of events?Is there a larger model at work of which the later in life crisis is a smaller part?

››››››››››› In those instances cited in the Introduction, one element is that of change; a negative change in performance and a numerically positive change in the probability of discontinuation.As the firm changes, the very characteristics that supported earlier success may "start turning into barriers" which might lead to impairment and even failure (Hofer and Charan, 1984).Another element is the passing of time.Change does not occur as a function of time but rather as a function of developmental maturity which occurs as time passes.As put by Quinn and Cameron (1983), "a consistent pattern of development seems to occur in organizations over time" with both behaviors and structures of one period distinguishably different from those of another.Lastly, there is an element of size.Not all small companies become big companies, but most companies that are very large today started out small (Chandler, 1962).These elements, change, time, and movement from small to large, would all seem to indicate that there is a growth model influencing outcomes.

››››››››››› Unfortunately, as so often seems the case in entrepreneurial research, while there is much agreement as to the appropriateness of a growth model in new venture performance, there is very little agreement as to which model, of the many available, to make use of (Aldrich, 1992).As described by Hofer and Charan (1984) there are four major types of growth models; the life cycle growth models, the stages of development models, the evolutionary models, and the transition models.

››››››››››› The life cycle models propose that firms progress through different stages of maturity in a fashion similar to biological organisms with stages of birth, growth, maturity, and death.Change occurs in a relatively set sequence as a result of the passing of time and is always in the form of a refinement of the earlier stage until the eventual decline of death.›››

››››››››››› Stages models hold in common with the life cycle models the concept of passing through a series of phases.While the firm and the founder remain basically the same, their focus and activities change.Unlike the life cycle models, however, it is not necessary to pass through all stages nor to do it in any set sequence.In stages models triggering change is not limited to the aging process but can also be due to events such as increased size and organizational complexity (Galbraith and Nathanson, 1978; Timmons, 1990; Terpstra and Olson, 1993).

››››››››››› In evolutionary models phases are also seen as developmental improvements but rather than the slow and steady progression seen in life cycle models, they suggest cataclysmic break-through change which alters the form of the organization in a drastic manner.Change follows a predictably hierarchical sequence driven by the growth of the organization but in order to move to the next phase the organization must alter its form so as to be entirely different from the form it had prior to the change.

››››››››››› Transitional models propose change that is both drastic and unpredictable.Driven by changes from within or without, the firm finds it necessary to abruptly and disruptively change their method of operation in order to survive.In the transitional period the firm leaves behind the safetyof routinized decisions and attempts to develop a new organizational strategy and structure that better match its new circumstances.During these transitional periods the firm is extremely vulnerable.

››››››››››› Each of the four model types possesses some theoretical strengths, but each also displays at least one flaw which prevents it from explaining a later in life crisis arising after initial success.Life cycle models insist on an invariant sequence of stages that are a result of the "aging" of the organization and, thus, do not allow for any decrease in performance except in the final decline unto death.This leaves us with no way to explain the pattern of growth, decline, and new growth often mentioned in the literature. While stages models allow for forward and backward movements and a multitude of sequences, they do not explain how the actual transition from stage to stage takes place, nor do they consider the particular vulnerability of firms during it, as cited above.Transition models speak directly to this problem but fail to provide guidance as to what might occur next or to provide a general model that could explain how the stages or the transitions that join them operate.Evolutionary models, while in some cases allowing for de-evolution, still tend to suggest an incremental step up or down a fixed ladder of structures and strategies.As put by Galbraith and Nathanson (1978:103), "The problem with all of these models is not that they are wrong, but that they are only partially correct."

››››››››››› Perhaps the real problem lies in the fact that each of the four model types are looked at as being mutually exclusive. It is possible that each model type accurately mirrors one part of a larger growth process.This could explain the mixture of anecdotal and empirical evidence each model has found and could also explain why researchers have, as yet, been unable to determine and agree upon a single prevalent model.

››››››››››› If each of the model types holds some element which accurately describes a part of the growth process experienced by small firms, then perhaps an amalgam model is called for.By pulling the strengths of each model together, a new and synergistically superior description may be had.One model which moved in this direction was the Churchill & Lewis (1983) model.While primarily a stages model it also incorporates many of the elements ofthe life cycle models and thus overcomes many of the weaknesses of each model type considered alone.

››››››››››› Unlike the majority of growth models which depict a firm's development following a curve, Churchill & Lewis utilize a decision tree structure (see Exhibit I ).They eschew the popular but narrow indications of a firm's development, sales and profits, and instead characterize the stages by an index which simultaneously considers size, diversity, and complexity.Each stage is described by its attributes along five management factors dealing with strategy, structure, and the owner's relationship to the business.This also allows them to differentiate the changing importance of various key management factors as the business progresses through the stages.

››››››››››› In the model the firm is propelled forward by entrepreneurial and strategic drive and is limited by environmental selection.In the earlier stages(one and two)the firmŪs movement is almost entirely due to environmental selection and adaptation.Then in stage three, with a place for it within the competitive environment secured, strategic choice enters and the firmŪs progress is the result of the counterbalance and interaction of the strategy and the environment.Finally, if all goes well, the firm has achieved the requisite resources to allow outcome to be largely predicated upon strategy alone.

››››››››››› By entering volitional strategic choice as a variable, the Churchill and Lewis model allows for the possibility of the non-monotonic movement that a life cycle model precludes.In addition, it appears that they also include elements of the transitional models.Each stage may meet with success or the failure of žfoldingÓ and, if successful, they may hold indefinitely at that point.The only way that risk is re-introduced is when they move, or attempt a transition, to the next stage.It is only at this point that the model holds the possibility of žfoldingÓ, exactly the type of risk of failure the transition models imply.

››››››››››› Two weaknesses remain.The model still cannot explain how a firm might come to be at risk for the later in life crisis nor does it explain the reports of firms moving more than one stage or phase at a time.It is possible by incorporating further elements of the other model types to strengthen the Churchill and Lewis model.The first weakness is overcome if the transitional periods which threaten firm survival in the transitional models are added between the phases of Churchill and Lewis.There is much in the literature to suggest that the changes in strategy and structure suggested by Churchill and Lewis to occur as a firm passes from stage to stage could trigger the increase in vulnerability ( Chandler, 1962;Galbraith and Nathanson, 1978;Hofer and Charan, 1984;Hrebniak and Joyce, 1985;Cowen, et al. , 1984;Sandberg, 1987).

››››››››››› The second weakness is overcome if a firms trajectory is considered.It has been hypothesized by Greiner (1972) that faster growing firms might pass through evolutionary phases more quickly due to a higher trajectory.If faster growth shortens the time a firm spends in a phase it is likely that it could also shorten the time spent in transition.If it shortened that time enough itis possible that the movement through a phase might be short enough so as to appear to be a žjumpÓ of more than one phase.››

››››››››››››››››››››››› With these additions, the model successfully overcomes several of the discrepancies between previous models and the behavior suggested in the studies cited in the introduction.It allows for variation in sequential upward movement such as that found by Drazin and Kazanjian (1990) who allow for three alternatives:firms may prematurely move into decline (jumping forward several stages), they may regenerate and "regress" out of decline back to an earlier and more successful phase (moving backward over the curve), or they may stay in the same phase for a period of time (the persistence referred to by Aldrich, 1979).Churchill and Lewis allow, as possible outcomes, retrenchment (falling back one or two stages), remaining stuck in a holding option for as long as its entire life, and, with the extensions proposed, the appearance of a forward leap beyond the next sequential stage.If these three variations do occur [(1) forward or backward movement through stages, (2) non-sequential movement while moving in either direction, and (3) cessation of movement while at one stage for an indefinite period of time] it would suggest the following proposition:

››››››››››› PROPOSITION I:Due to the existence of movement on the curve which is not necessarily monotonic, the relationship between development and age will tend to be non-linear.

Venture Types

››››››››››› By entering human volition ( in the form of strategic choice) as a variable that interacts with determinism to alter outcome, the possibility of differing patterns of growth and performance also enters (Hrebniak and Joyce, 1985).If it is assumed that all firms follow a common and pre-determined pattern of development then a similar level of performance for any given level of development would be expected.The literature suggests this is not the case.Strategic choice opens the possibility for differentiation of performance.

››››››››››› First, the firm can choose to grow or not.Those who do not may become the mom-n-pop or lifestyle businesses discussed in the literature ( Cooper, 1982; Sandberg, 1986; Timmons, 1990).Those who do will be differentiated on the basis of their success in pursuing that growth. As a result of how well they perform within it, they can be grouped into categories.By integrating and collapsing the various theories "types" into categories, four groups are created:those who fail, those whose sales continue to increase moderately over time as would be expected by most life cycle models and thus are "on track," those whose performance is higher and occurs faster than "on track" and makes them "over achievers," and those who attempted to be(or actually were) either "on track" or "over achievers" but have since declined and are now struggling with slow and/or negative growth and poor performance, the "under achievers."

››››››››› All of the above would lead us to believe the following:

››››››››››› PROPOSITION II:Amongst firms pursuing growth (all firms, minus the no-growth firms) we would expect to find three groups distinguishable on the basis of their performance; under achiever with poor performance for their developmental maturity, "on track" with average performance for their developmental maturity, and over achiever with high performance given their developmental maturity.(Due to its demise, the "extinguished" group would not be present except in historical record.)

 

››››››››››› It would be within the žunderachieversÓ group that we would expect to find the subject ofour search, those firms going through a transitional phase and showing signs of decline. who might again climb to žon trackŪ or žover achieverÓ status in a renewed stage of growth.Given that the model suggests that firms renew their risk each time they decide to move to another stage of development and thusreset the liability of newness clock (Stinchcombe, 1965), and that it also suggests that the firm gains the ability to make this choice in its later stages, it would lead us to believe the following:

››››››››››› PROPOSITION III:Due to the continued liability a firm faces each time it moves from stage to ››››››››››

››››››››››››››››››››››› stage and its inability to have an active choice in making the move which triggers the

››››››››››››››››››››››› liability until its later developmental stages, there will be a group of declining firms

››››››››››››››››››››››› much older than the one to three years associated with the liability of žnewnessÓ.

Hypotheses

››››››››››› The Churchill and Lewis model, with the preceding adaptations, could explain a later in life crisis.If we believe that this model may be in operation, it would lead us to make certain assumptions concerning what patterns we would find when looking at a large group of firms.To test these assumptions, the following hypotheses (based on the propositions specified in the preceding two sections of this paper) were developed.

››››››››››› Due to the possible forward and backward movement by a firm on the curve and the varied performance of individual firms at a given point on the curve, the following hypotheses are suggested:

›››››››››› H1a:The relationships between age and sales and

››››››››››› H1b:Age and performance will be non-linear.

By adding the ability of a firm to make a volitional choiceto not evenparticipate in the life cycle growth

curve, it becomes possible to expect a group of firms which remain at low sales for extendedand even

eternal periods of time.This would explain the lifestyle mom-n-pops and the start small/stay small

firms.We are not interested in such firms but rather in the firms who choose growth and thus risk a

later in life crisis.

››››››››››› When a firm chooses to move onto the growth curve, it may meet with variable success.Some firms would be expected to meet with average success, moving steadily up in age and performance.Other more successful firms would be on an accelerated path, performing better at an earlier age.The remaining firms would be those less successful, possibly starting successfully on a growth curve only to fall prey to transitional vulnerability.The varied success of these three groups as they follow the growth curve would lead us to form the following hypothesis:

››››››››››› H2:Of those firms on the growth curve, there will be three sub-groups with significantly

››››››››››› different levels of performance given their developmental maturity.

Since the model suggests that the firms on the growth curve have met with at least some initial success and that decline may occur at any stage, even later ones, the following could be true:

››››››››››› H3: The less successful, declining sub-group will be much older than the one to three years of

››››››››››› age generally considered to be the period of "liability of newness."

Methods

››››››››››› In order to search for that evidence a database of Michigan firms produced by Harris Publishing as a counterpart to their Harris Michigan Industrial Directory was analyzed.After removing those firms who did not report critical data on sales or size and those with non-industrial SIC codes, a sample of 5,192 industrial firms remained.In order to look more clearly look at a growth phenomenon, the žno growthÓ firms were removedsimilar to the manner in which Anikeef, et al. (1993) removed a group of middle-sized firms in order to žhighlight the impactÓ of age and growth.The final sample consisted of 3448 firms.

››››››››››› To look for the existence of the hypothesized venture types a 3x3 matrix was developed with sales on the horizontal edge and age on the vertical edge.Ranges of values for each of the variables were developed by loosely integrating the ranges for stage transitions suggested in the literature ( Vesper, 1980; Timmons, 1990; Osborne, 1992; Reynolds, 1993) resulting in the following gradients:

 

 

 

 

››››››››››› Age (from top to bottom)

››››››››››››››››››››››› Young: Firms with 1-9 years of age

››››››››››››››››››››››› Middle: Firms with 10-19 years ofage

››››››››››››››››››››››› Mature: Firms with 20+ years of age

››››››››››› Sales (from left to right)

››››››››››››››››››››››› Low: Firms with sales of $1 to $500,000

››››››››››››››››››››››› Moderate: Firms with sales of $501,000 to $5,000,000

››››››››››››››››››››››› High: Firms with sales over $5,000,000

Within the matrix and according to the model, the žon trackÓ firms would occupy the three cells on the top left to bottom right diagonal (age young /sales low, age middle /sales moderate, and age mature /sales high) .The žover achieversÓ would be in the cells above that diagonal (age young /sales moderate, age young /sales high, and age middle /sales high) and the žunder achieversÓ would occupy the cells below the diagonal (age middle / sales low, age mature /sales low, and age mature /sales moderate).

The Variables

››››››››››› The hypotheses are all based on performance over time.In order to test them it was necessary to develop substitute measures for both developmental growth and performance.Three measures that are typically used in the literature to approximate growth are sales (Cragg and King, 1988), age (Reynolds and Miller, 1987), and number of employees (Van de Ven, et al. , 1984).To these we added a variable for asset size, square feet of plant.

››››››››››› A perhaps more difficult task is to identify similarly good substitutes for the dependent variable(s).If the above measures are used to infer development, there must also be a way to measure performance as it varies over time and from firm to firm.In many venture performance studies, profit has been used as a measure of success, but Cooper (1982) warns us that this may not be a good measure as many small ventures have goals other than profit.Van de Ven, et al., (1984:90) states the case that "performance measures for company start-ups must differ from traditional measures of performance" as they are usually cash hungry and growth oriented, foregoing today's profits to build the future.

››››››››››› In this research, we seek to find a situation in which a firm experiences a decrease in performance.It is not a loss of the ability to perform or there would be no evidence of rejuvenation.The fact that the ability to be successful exists but is not utilized to do so suggests slack resources or, more accurately, below par productivity.In the current study, indications of this might be sales per employee (a measure of labor productivity) or sales per square foot (a measure of asset productivity).A similar performance measure was used by Anikeef, et al. (1993) in a 1993 study of the real estate industry.While neither of these were original variables in the database, they were easily formulated by using original variables.

››››››››››› Sales per Employee:

››››››››››››››››››››››› This was measured, by firm, as sales divided by number of employees and could be considered an indication of how efficiently labor is utilized.

››››››››››› Sales per Square Foot:

››››››››››››››››››››››› This is measured, by firm, as sales divided by square feet of physical plant and could be considered an indication of how efficiently assets are utilized.

 

Results and Discussion

››››››››››› The hypothesis were tested using procedures available in the SPSS-X software package.Specific tests used included Descriptive Means, Linear Regression, and Analysis of Variance.

››››››››››› To test Hypothesis 1a, which claims that the relationship between age and sales are non-linear due to non-monotonic movement, linear regression was used.As can be seen in Exhibit IV, there appears to be interaction between the variables, significant at the .01 level.What can also be seen, though, is that the percentage of variation it explainsis relatively low (Adjusted R [SoM1]  2 value of .02618).

››››››››››› The evidence, then, did not support Hypothesis 1a.The results show that the relationship does appear to be linear.While not providing proof for our hypothesis, we do not believe that this evidence rules out the non-linear movement proposed.It is possible that, for the most part, firms tend to follow a normal life cycle pattern of sales increasing over age.Even with this general tendency, it is possible that certain firms could indeed leap forward, fall backwards or stall.Indeed, the mere existence of the significant number of members in both the "over achiever" and "under achiever venture types speaks strongly to its truth.

››››››››››› These findings are consistent with the findings of Reynolds & Miller (1987b) that, while age/sales correlations are statistically significant, they account for such a small proportion of the variance as to be of little help in predicting sales.They are also consistent with our expectation that sales would be correlated to age but not primarily a function of it, and thus may not directly disprove Hypothesis 1a.

››››››››››› To test Hypothesis 1b, which claims that the relationship between age and performance are non-linear due to variation in performance, linear regression was once again used. Linear regressions were run on the variables sales per employee, sales per square foot, and age.In each case, one of the sales based performance measures was assigned as the dependent variable, and age was assigned as the independent variable.Some linear relationship was found for both performance measures regressed against age (both were significant at the .01 level) but, again, the percentage of variance explained was small (both had adjusted R2 <.002), even smaller than that in the age/sales analysis (Exhibit II).

››››››››››› To test Hypotheses 2 and 3 the firms were arrayed in the 3x3 matrix and divided into the three hypothesized venture types as described in the methods section. Looking at the means of each growth and performance measure for each of the three subgroups it can be seen that on all measures the "under achievers" have the lowest means (See Exhibit III). Interestingly, though, while the "under achievers" are always the lowest means of the three, the highest values are not always found in the "over achievers."As would be expected, the high performers had higher sales per employee than the "on tracks", but had lower overall sales and sales per square foot.This may be an anomaly or it may be explained by one of two other possibilities.It could be due to the design of the study.In setting up the 3 x 3 matrix, all of the firms in , the bottom right cell (with age mature /sales high) are considered to be "on track".In actuality, it is likely that some of the over achievers would continue to superior performance into their mature years.If this was the case, that cell would contain a mixture of "on track" and "over achieversÓ.By including "over achievers" in the on track averages, the on track means might be artificially inflated.It may also be evidence of a build up of capacity in preparation for accelerated growth as suggested by several researchers (for example, see:Cooper, et al., 1992b).Thus, as high performers built capacity to handle high growth, their plant size would increase while their sales remained constant causing the current productivity of their assets (sales per square foot) to fall even as their labor productivity (sales per employee) remained high.

››››››››››› To test the statistical significance of these differences, ANOVA's were run on the three subgroups means for the following variables:Sales per Employee, Sales per Square Foot, Number of Employees, Number of Square Feet of Plant, and Age.

››››››››››› The ANOVA's showed a significant difference on all variables when grouped by type and thus support Hypothesis 2(See Exhibit IV).The under achievers were the oldest and had the lowest values for performance and size.Over achievers were exceptionally young, smaller than the on-tracks in size of plant and employment, relatively close to "on-tracks" in sales and performed better (as measured by sales per employee but not sales per square foot as discussed above).The fact that the under achievers are significantly older than the other two groups and, by looking at their productivity measures, performing significantly less well, suggests that their problems have arisen later in life.Since we have removed those firms which choose "no growth", this group must represent a combination of older firms which were never successful and firms which were once successful and now are not.It is this later group, those who pursued growth and have fallen into decline only as a result of their choice to pursue it, that we believe exhibit the liability of growth.It is only by the choice of pursuing growth that the firm has been put at risk, and those under achievers are paying the price for it.In this manner they see decreased performance and renewed risk of failure much later in life than that of the one to three years postulated by žthe liability of newnessÓ.This coincides with the recent research finding a later in life "liability of adolescence" (Bruderl & Schussler, 1990; Fichman & Levinthal, 1991) and supports Hypothesis 3.

Summary and Implications

››››››››››› When the sample was divided into three groups based on the hypothesized distribution by age and sales, evidence was found of significantly different performance levels by venture type as suggested by Hypothesis 2.There was a group ofžon tracksÓ with average performance for their given developmental level, a group ofžover achieversÓ with high performance for their given level of development, and a group ofžunder achieversÓ with low performance for all levels of development.The žunder achieverÓ group exhibited the lower performance and age older than the one to three years suggested by the žliability of newnessÓ supporting Hypothesis 3.While the non-linearity of age and sales and age and performance of Hypothesis 1a and 1b were not supported, it is possible that this was due to a central tendency of the firms to on average follow a pattern of increased sales and performance with increased development.This would not preclude the possibility that some firms do not stay on this developmental track, jumping ahead and falling back.Even though the relationship showed linearity, the percentage of variation explained by age was so small as to be of practically no aid in predicting either sales or performance.

››››››››››› Due to the cross sectional nature of the study, we were unable to prove that the extended model was in operation.That is, we could not prove a pattern of success followed by the struggle of transition, resulting in renewed success, continued struggle, or failure.The presence of three groups of firms with significantly different performance levels given their development does, however allow for the possibility that the model is in operation.It could explain the discrepancies between the behavior predicted by other models and the actual observed firm behavior discussed in the literature.

››››››››››› Unlike the biological growth models which mimic an organismic necessity to progress along its natural development, the inclusion of choice allows for the firm's ability to actively choose to grow or not. Inclusion of the role of active choice allows for the possibility that firms may drop off the curve or accelerate their trajectory along it, resulting in the non-linear movement.

››››››››››› Once a firm pursues growth, it must then succeed at it.The extent to which it does so is the underlying basis for many of the performance typologies in the literature (for example:Vesper, 1980; Reynolds & Miller, 1987; Cooper, et al., 1992).In this study, support was found for Hypothesis 2, showing evidence of three distinct sub-groups of growth firms:over achievers, those on track, and under achievers.Support was found for Hypothesis 3, showing evidence of an older and lower performing group of firms which might be the result of the later in life crisis.

››››››››››› Additionally, the model theorizes that the danger experienced during transitions may be due to the shifting needs, activities, and market focus the firm must make to move from phase to phase.If true, this would have distinct implications for the firm, marketing managers, consultants, and researchers.Firms should organize and manage with these changes in mind, planning ahead shift strategy and structure to reduce or remove the transitional decline.Firms most at risk would be those pursuing a high growth strategy as they would move through more transitions in a given time and have less time to make the passage through the transition.Marketing managers should design their efforts to support the firms changing needs and focus, altering strategy and tactics to match the and meet the goals of each phase it passes through.Consultants should be aware of the phenomenon of this later in life threat, helping firms to predict its onset (possibly with the help of productivity measures) and aid them in making the transition more safely.Researchers need to be aware of this later in life crisis and take it into account in modeling and measuring.It cannot be assumed that performance is determined entirely by environmental interaction or a predetermined growth curve.With volition comes the possibility for variation.Within each group and within each phase, the performance measures must change in order to account for the variation both due to differing performance within the stage and the difference of performance goals between the stages.Hopefully the extended Churchill and Lewis model will aid in these endeavors.

››››››››››› There is increasing evidence in the literature that a later in life threat that is at least as likely if not more likely than the earlier threats theorized by the liability of newness.This later life threat could be considered a "liability of growth" as it can only become a threat after a firm has actively chosen to continue historically successful growth.It is only by pursuing this secondary growth that a firm can incur the liability of not achieving it.This study has provided some support for an integrative growth model based on Churchill & Lewis' (1983) stage model.With this model there is the possibility of a later in life crisis, the "liability of growth," which is only possible through growth and which might be predicted by asset and labor productivity measures.It is hoped that future research will prove these possibilities to be probabilities.

 


 

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